A heads up, as Tomasz would say.... US short selling 'ban' due to end ... likely to be extended.
An article discussing the outcomes of the ban so far: (scroll down to "Don't Blame The Short Sellers"). http://finance.yahoo.com/tech-ticker It is a not a time to let the emotions run hot ... those who are keeping cool, calm and collected are doing well ... they are bad days for investors and savers but good days for value buyers and speculators (condolences to anyone who has lost money .. a 63 year old, 2 years retired, friend of mine, with invested retirement funds, is now heading back to work). FWIW an opinion on where we are now. There are three things happening simultaneously, each with different outcomes: a) The real crisis is confined to the area of Financial Management, as opposed to the market i.e. the way that businesses carry out financial transactions between themselves, their compliance with govt standards and the standards in force. The longer term agenda is that of the IMF Global Stability Forum (as discussed at last weeks unofficial meeting of G20 leaders in NewYork). http://www.fsforum.org/publications/r_0804.pdf The short term affect on the markets is minimal since that horse has already well and truly bolted. Projecting this crisis onto the market holds little value for traders. b) Public perceptions of the crisis are focused around the security of their deposits .... this is the real danger in the short term ... it appears to be easily contained by Govt actions to guarantee deposits ... presumably ave private savings are far outweighed by ave private debt so the total possible withdrawals are within a containable range (respective govts have deep enough pockets to insure private savings e.g. Ireland, France, US increasing FDIC insurance etc). c) Market volatility ... is more emotional than rational ... emotional outbursts tend to come quickly and swing back the other way quickly ... by nature they can't be sustained for long periods of time ..... after the first few extremes they tend to diminish in strength.... the longer between episodes the lesser the chance for another extreme event. The reality is that the weaker companies are passing into stronger hands (the market is doing its job). Currently banks can't maintain lending levels because they need cash reserves to cover the mini-run on the banks... this is flowing onto other businesses, who will in turn suffer lower sales/earnings (new shorting opportunities are created!). http://biz.yahoo.com/ap/081001/auto_sales.html http://biz.yahoo.com/ap/081001/economy.html This cycle, of a shortage of bank liquidity, will soon come to an end but it will take some time to get the machinery, in that area, running again. On top of that large financial institutions have had their portfolios slashed (on paper) OR are in damage control OR are in the process of integrating merged companies so there is not so much cash around, amongst the big players, to buy stock and hence support a stong bull rally (compare to Buffet who keeps 10Billion acquisition cash in reserve and has now so obviously revealed his very simple strategy of using it to buy high probability growing yields when the price is right). A side play to the whole scenario is that the Banks, that are holding big exposures, are playing it for all they can to maximise their own returns. As long as guarantees of bank deposits are in place, and hold, the crisis will pass ..... market volatility and Finacial Management reforms are more emotive, than substantial issues, in the short term. In the longer term it appears to be a bit of a grind for the US to work its way out of a recession. brian_z
