Friday, September 19, 2008

Simple Jacks

"You went full retard, man. Never go full retard."

— Kirk Lazarus, Tropic Thunder

So which is it?

Did Christopher Cox of the SEC and Hector Sants of the FSA simultaneously go "full retard" yesterday in temporarily banning short sales of financial stocks, or is there a secret government plot to use the markets to attack financial terrorists?

Almost every commentator and market pundit I have read this morning who has any fucking clue about the markets or what they are talking about in general has registered stunned disbelief at the SEC's and FSA's actions. The common reaction seems to be a mixture of: a) what do Cox and Sants think they're going to accomplish with this?; b) the relief/short covering/apotheosis-of-the-morons rally will be very short-lived and followed by a very long and ugly aftermath; and c) they went full retard.

Barry Ritholtz does provide some comic relief over at The Big Picture this morning by relating a conversation with a fund manager who does not think Jim Cramer was batshit crazy when he speculated that "financial terrorists" were behind the waves of selling of financial stocks over the past few weeks, but you can tell he is just casting around for some flotsam to cling to as the S.S. Capitalism goes under the waves. He doesn't want to believe her captain and first mates blew up the ship from within simply because they went full retard. I have to sympathize: it's a bitter pill to swallow.

Interestingly enough, crack financial reportrix Bess Levin at Dealbreaker puts some data out there that can be viewed by a sympathetic reader as both a) providing corroborative evidence that the War on Terror may have moved into the financial markets already and b) short sale restrictions don't make one damn iota of difference. After all, Pakistan is a key front in said WoT, and it is easy to imagine its market regulators trying to stop perceived bear raid attacks on market integrity by Islamists hostile to the government (and capitalism in general, natch), just on the off chance any hostile Islamists with sufficiently large margin accounts really exist.

What is sad to contemplate, however, is not only was banning short sales insufficient to keep the Pakistani market from continuing its long-term slide, but also one can argue that the short-selling Islamofascists—if there are any—may have actually surpassed their goal of weakening Pakistan's financial system by getting the country's own government to undermine the very principles of unrestricted trading and unhindered price discovery that system is built upon. It is beyond depressing to imagine that our market regulators may have handed financial terrorists a similar victory with their own boneheaded moves.

Let's hope, instead, that Cox and Sants simply went full retard. While it is scary enough to contemplate the two leading overseers of modern financial capitalism simultaneously having spontaneous frontal lobotomies, it is somehow less disturbing than thinking we have cut off our own heads to avoid the guillotine.

Roger: "I don't like the games you play, Professor."
The Professor: "War is hell, Mr. Thornhill, even when it's a cold one."
Roger: "If you fellas can't lick the Vandamms of this world, without asking girls like her to bed down with him and fly away with him and probably never come back, perhaps you ought to start learning how to lose a few cold wars!"
The Professor: "I'm afraid we're already doing that."

North by Northwest

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