11/19/2008
The Uptick Rule was enacted in 1938 to prevent stock market manipulation. It states that a short sale can only be executed after an uptick in the price of a company’s stock. It was meant to prevent cascading prices and bear raids.
In 2007 the SEC eliminated the rule after a trial run in 2005 when the rule was temporarily suspended. They found the markets functioned satisfactorily without the Uptick Rule.
The Uptick Rule was designed to protect markets in stress. The only problem was that 2005 and 2006 the stock market was moving up, not stressed and not a good period to decide the value of the rule.
2008 is precisely the kind of market environment that this rule was designed for and would go a long way to helping the market function better.
President-Elect Obama, You’re looking for the first thing to do. Reinstate the Uptick Rule. Today!
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Minutes Of the 10/29/08 FOMC meeting were released today. In the minutes were the Fed’s opinion that the U.S economy would not recover until 2010 and the unemployment rate would continue to climb into 2011. There was a flight to quality in the bond market and the stock market sold off closing down 427 points. It’s nice to know that we’re on life support till then.
http://www.federalreserve.gov/monetarypolicy/files/fomcminutes20081029.pdf
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A brief word on the arbitration system…… There are those lawyers who game the system by making multiple merit-less last minute requests for postponements, subpoenas or discovery, when it is inconvenient for them to appear at scheduled hearings because another more lucrative case is available.
Lawyers that abuse the arbitration process should not be allowed to handle cases in front of a Finra panel.
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Detroit automakers get real! First you wanted quotas on foreign cars you didn’t want to compete with. Then you get suv’s designated as trucks so that they would not have to meet auto emission standards and could be made cheaper than traditional cars.
Legacy costs did put the industry at a disadvantage with foreign manufacturers ( hourly employees of the big 3 still make $75 an hour), but the renegotiated contracts with the Labor Unions set to go into effect in 2010 could be implemented now. Maintaining too many unsuccessful models has plagued the industry for years.
The CEO’s that arrived in Washington today with their hats in their hands would probably serve their industry better if they didn’t arrive in their private jets. RJB