April 3, 2008
The Uptick Rule
In July of this year the SEC finally overturned the "uptick" rule on short selling. The rule disables short sellers from shorting stock until after an uptick in the stock price. Jim Cramer has called the SEC "morons'' for repealing the rule. As usual, Cramer is wrong. The market for years has had a vested interest in stock price appreciation and the law was slanted in that direction. Penalties on short sellers are part of the legal bias. The bias proves short term comfort at a long term price -- short term prices are artificially high and major asset re-valuations, when they come, are big and painful. The same argument applies to artificially low interest rates -- we get short term asset bubbles that are very painful when they finally collapse. Cramer, of course, is also pushing very low interest rates (to allow his buddies at the investment banks to print money). Cramer is the moron.
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Do the Sponsors have a case to compel the Banks to fund under specific performance? I hear there are issues of compelling a lender to lend under specific performance in NY.
Posted by: Jeremy | Apr 4, 2008 10:44:39 AM