Moon of Alabama Brecht quote
September 18, 2008

McCain and Cox

CHRIS Cox for VP?

Former conservative colleagues in the House of Representatives are  Christopher Cox, chairman of the Securities and Exchange Commission since 2005, boosting to be Sen. John McCain's vice presidential running mate.
ROBERT D. NOVAK - Syndicated Columnist, March 18, 2008


Republican presidential candidate John McCain, in remarks prepared for delivery Thursday, said he thought Christopher Cox, chairman of the Securities and Exchange Commission, should be dismissed.
In a speech in Cedar Rapids, Iowa, Sen. McCain said the SEC allowed abusive short-selling, or bearish bets on a company's stock, to turn "our markets into a casino."
McCain Says Cox Should Be Fired As SEC Chief Amid 'Casino' Markets

McCain is right that Cox should be fired. (Still unlike McCain assumes, Cox can not be simply fired on a Presidents say so.) But Cox should certainly not be fired for allowing short selling.

If you allow people to act on expected increases of a products price, like filling up the car before a Gulf hurricane hits because gas will likely be more expensive the next day, why not allow people to act on an expected decrease of a product's price? Why should there be an asymmetry between up- and downside risk?

This is the real reason why Cox should be fired:

The events of the past year are not a mere accident, but are the results of a conscious and willful SEC decision to allow these firms to legally violate existing net capital rules that, in the past 30 years, had limited broker dealers debt-to-net capital ratio to 12-to-1.

Instead, the 2004 exemption -- given only to 5 firms -- allowed them to lever up 30 and even 40 to 1.

Who were the five that received this special exemption? You won't be surprised to learn that they were Goldman, Merrill, Lehman, Bear Stearns, and Morgan Stanley.

Blaming short sellers is in vogue these days. But financial markets did not go down because of short sellers. They did and do go down because rampant fraud allowed after zealous deregulation. Something McCain and Cox both have favored and are still favoring.

Posted by b on September 18, 2008 at 19:48 UTC | Permalink


Give a man a fish and you will feed him only for a day,
But teach a man how to short, and you'll make him rich.
Old Sanskrit Proverb

Posted by: Ho Chi Minh | Sep 18 2008 20:17 utc | 1

40/1 leverage? Unless I totally misunderstand this stuff, it basically means that if your investments go down by 2.5% instead of going up, you're totalle broke. If it's correct, then such an undertaking should be enough to prove that someone is certifiably insane.

Posted by: CluelessJoe | Sep 18 2008 20:27 utc | 2

Yes, Britain has just banned short-selling this evening. I have difficulty in imagining how this would work. I am no financier, but it seems to me such a ban would be incredibly easy to get round, and would have little effect. After all, our financiers are quite nimble in finding new techniques.

Posted by: Alex | Sep 18 2008 20:27 utc | 3

In fact, the British ban is so short-sighted that it makes me wonder, yet again, about the competence of the so-called financial expert Prime Minister Gordon Brown.

Posted by: Alex | Sep 18 2008 20:35 utc | 4

Alex, I'm a Brit. It doesn't mean a bloody thing. It's window dressing pure and simple. Anything to make it look like that shambling oaf Gordon Brown has got his eye on the ball when in fact he's got it up his arse end.

Posted by: Spyware | Sep 18 2008 20:41 utc | 5

Sorry, I know this is OT, but b, who or what is Sorcha Faal?

Is it a serious site, or just alarmist?

Posted by: Ben | Sep 18 2008 20:55 utc | 6


Posted by: pb | Sep 18 2008 21:25 utc | 7

I believe bullets and organ harvesting would be a good start for many of the clowns involved with this fiasco.

Posted by: Grim Boy | Sep 19 2008 0:30 utc | 8

not">">not dark yet but it's getting there

Posted by: remembereringgiap | Sep 19 2008 1:28 utc | 9

Thanks for the link pb.

Posted by: Ben | Sep 19 2008 1:53 utc | 10

Is the proposed banning of short selling in the US designed entirely to save GS or is there another reason ?

Posted by: gordon | Sep 19 2008 2:32 utc | 11

Fed and Treasury Offer to Work With Congress on Bailout Plan

With the Fed running short of unencumbered reserves, the Treasury Department had begun raising fresh cash for the central bank by selling new Treasury bills at an unprecedented pace — $200 billion this week alone — and parking it at the Fed for whatever use it wanted.

Posted by: b | Sep 19 2008 6:44 utc | 12

Finally the 'monoline' insurers might get downgraded. That should have been done a year ago. This of course makes their insurances worthless and will lead to further downgrades of MDS and other papers.

Bond Insurers Are Facing Downgrades

MBIA and the Ambac Financial Group may have their debt rankings cut several grades by the credit ratings company Moody’s Investors Service after Moody’s raised its forecast for losses on securities backed by subprime mortgages.

Syncora Guarantee, the Financial Guaranty Insurance Company and CIFG Assurance North America will also be evaluated for the effect of the higher loss projections, Moody’s said.
MBIA, based in Armonk, N.Y., and Ambac are the two largest bond insurers. Five of seven formerly AAA-rated bond insurers have been stripped of their top rankings this year after straying into securities backed by subprime mortgages from backing the debts of cities and states.

Posted by: b | Sep 19 2008 6:48 utc | 13

r'g @9

I can't even remember what it was
I came here to get away from

Great link. Thanks.

Posted by: Hamburger | Sep 19 2008 8:33 utc | 14

Great link. Thanks.

Yeah, it's a great link, but, ironically, not for the reasons you think. A while back, in another thread, it was pointed out that Dylan is just another sell-out scumbag, just like all the members of Congress, well, most anyway, and all the other vermin in the U.S. Corporate Government. It was bad enough to hear Dylan's shrill voice, but now knowing he was, and is, a wolf in sheep's clothing makes his words ring hollow.

Posted by: Holly Maddox | Sep 19 2008 11:43 utc | 15

Bob Dylan's new Cadillac Escalade commercial

Either he's of the trickster archetype or his lines in that song (haven't listened to the whole album) is foretelling his surrender. None the less, thanx r'giap, the song has a power in it's own right.

Posted by: Uncle $cam | Sep 19 2008 12:51 utc | 16


as in ancient rome - he is neither ruler or slave or he is both. the observations from within the belly of the beast are as invaluable as was wm blake

Posted by: remembereringgiap | Sep 19 2008 13:26 utc | 17

@ #6 & 7

I spent a few minutes on my life looking and, imho, Sorcha is an elegant piece of media BS.

What is diststeful is that she/he/it/they are proming a message which is revelant to our present situation -- and bs about it is insidious disinformation.

Posted by: Chuck Cliff | Sep 19 2008 14:53 utc | 18

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