despite the major market indices being more or less at the same level they were at last weekend, it was an insane week on wall street, leaving only two independent U.S. based bulge bracket investment banks standing. or… slouching. with lehman and ml falling this week to bankruptcy and a takeover and AIG taking a super-sized loan from bailouts ‘r us (read: the fed) you might have thought the worst was over.  you’d especially think that after the s&p jumped 4% after the announcement. but really the government has been putting spongebob band-aids over problems that equate to me taking a chainsaw to your arm.

shortly before i left the office on thursday i heard my COO step out of her office to exclaim “cox is speaking to congress! wsj.com newsflash!” when the british had just banned short-selling for the rest of the year, and your firm runs short and market-neutral hedge funds you can tell this means it’s going to be a LONG friday.

well, i call shenanigans! on principal i don’t personally short. it just feels like bad juju, but short seller’s have their place in the market.  if one of the missions of the SEC is to maintain fair, orderly, and efficient markets i’m really not sure limiting market participants is “fair”, that you can call any trading done this week “orderly”, or consider your actions as moving towards “efficient”.  instead you alienate market participants that help bring RATIONAL valuations to the market.  shorting may not prevent a stock bubble, but sure as hell helps to keep prices sane.

FDR had “The New Deal”. secretary Paulson & Co have given us “The Raw Deal”. the market irrationally jumped friday morning on news that the government was planning to cover all the bad debt that banks had on their books.  wait, that sounds vaguely familiar.  kind of like this again, except it doesn’t just give banks the power to disguise their balance sheets for periods when they need to report… it gives banks the power to make the Fed’s balance sheet permanently look rather lehman-esque.

thanks a lot.  thanks to all the greedy bastard mortgage brokers who gave jumbo loans to people with no income and the investment banks that securitized and bought what was essentially investment-grade rated junk debt.  thanks to all you financially irresponsible americans for making it harder for EVERYONE ELSE to get a mortgage, or even a car loan.  and thank you america for NOT teaching them a lesson. laissez unfaire.