- Editorial Markets Commentary -

(Go to http://www.financialwire.net/?s=cmmtry for all of today’s commentaries.)

May 20, 2010 (FinancialWire) (Investrend Forums Syndicate) (By Susanne Trimbath, Ph.D.) — Editor’s note: About two years ago, the short-selling the train wreck in the U.S markets began to pick up speed, prompting SEC chairman Christopher Cox to invoke a one-month ban on July 15, 2008, against naked short selling in 19 battered financial stocks, including Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), Citigroup (NYSE: C), Lehman Brothers (OTC: LEHMQ), Credit Suisse (NYSE: CS), Merrill Lynch (DOA, as in dead on arrival), Bank of America (NYSE: BAC), J.P. Morgan Chase (NYSE: JPM), Fannie Mae (NYSE: FNM), and Freddie Mac (NYSE: FRE). The following from FinancialWire(tm) contributor, Susanne Trimbath, applauds the German Chancellor for carrying the anti naked short selling torch:

I applaud the courage of German Chancellor Angela Merkel for banning naked short selling in Germany. And a “wag of the finger” goes to the rest of the Euro Zone — plus the Securities and Exchange Commission and Congress in the U.S. — for not doing the same. Naked short selling is the ultimate theft. It is selling what you not only don’t own but have no intention of ever delivering.

The U.S. supposedly has laws against this already, but those laws are not enforced. After the Crash of 1929, they were called “Blue Sky Laws” — so named because brokers were selling stocks that had nothing behind them except the clear blue sky. Still, the fails to deliver that are the evidence of naked short selling topped $6 billion even after the Crash of 2008. Worse yet, fails to deliver in US Treasury bonds topped $2.5 trillion (yes, Trillion with a “T”) and stayed there for 7 weeks. No fines, no prosecution, not even a reprimand were issued to the primary dealers that perpetrated naked short selling against their own country.

Every market should be prohibiting naked short selling or failing to deliver securities for settlement. According to data from a UK research firm, five percent of all trades executed for pension funds fail to settle on time. Each instance of securities sold but not delivered denies the issuer of the benefit of capital market support. It is no different than a broker issuing phony, counterfeit bonds and deceiving an investor into thinking that they are investing in — supporting — the German government.

All governments — from nations to the local sewer district — are at risk for this behavior. As Merkel told lawmakers in Berlin yesterday, the consequences of inaction are “incalculable.” The only limit is the clear blue sky.

Source: Investrend Weblogs (http://www.investrendweblogs.net/strimbath/).

Susanne Trimbath, Ph.D. is CEO and Chief Economist at STP Advisory Services, LLC. She was Senior Research Economist at Milken Institute and Senior Advisor on a USAID-sponsored capital markets project in Russia. Her early career included financial services operations at national clearing and settlement organizations in San Francisco and New York as well as at the Federal Reserve Bank of San Francisco. She also worked on Wall Street at the Pacific Stock Exchange and Depository Trust Company. A multi-published author, co-author and editor, Dr. Trimbath holds a Ph.D. in Economics from New York University. Go to http://www.investrendweblogs.net/strimbath-profile to read more about Dr. Trimbath and her "Outside The Ivory Tower" Investrend Weblog. Dr. Trimbath also invites readers to connect with her via Twitter (http://twitter.com/SusanneTrimbath).

Real-time, streaming research for companies and funds mentioned in FinancialWire(tm) news is available via the Investrend Research Syndicate, courtesy of Stock Smart (at http://investrend.stocksmart.com/ss/html/hpcompany.html).

FinancialWire(tm) is committed to serving the financial community through true journalism and providing relevant resources to investors. Standards-based, independent equity research on numerous public companies is available through the Investrend Research Syndicate (http://www.investrend.com/reports) written by FIRST Research Consortium (http://www.investrend.com/FIRST) member-providers. Free annual reports and company filings for companies mentioned in the news are available through the Investrend Information Syndicate (at http://investrend.ar.wilink.com/?level=279). FinancialWire(tm), in cooperation with the Investrend Broadcast Syndicate, also provides complete, daily conference call and webcast schedules as a service to shareholders and investors via the FirstAlert(tm) Network’s “FirstAlert(tm) Daily” (at http://www.financialwire.net/news-alerts/).

FinancialWire(tm) is a fully independent, proprietary news wire service. FinancialWire(tm) is not a press release service, and receives no compensation for its news, opinions or distributions. Further disclosure is at the FinancialWire(tm) website at http://www.financialwire.net/disclosures.php and http://www.financialwire.net/2010/04/23/safe-harbor/). Additional resources for investors are also accessible via the FinancialWire(tm) website (at http://www.financialwire.net/2010/04/23/investor-resources/). Contact FinancialWire(tm) directly via inquiries@financialwire.net.

[ssryrsyr] [wtchr] [wblgi] [cmmtry] [edtrlx] [mrktqr] [trmbthtbby] [bnkngnknb] [rgltryrtl] [cmplncz] [gvrncnr] [lnslndgdnls] [mrtgtrmrtg]

Legal Disclaimer:

EIN Presswire provides this news content "as is" without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the author above.