20080919 1047

DOW 11,313.29 +293.60
NASDAQ 2,251.79 +52.69
S&P 500 1,239.12 +32.61

Markets had a huge upside reversal yesterday on talk of limiting short selling. It was announced that short selling would be restricted in about 800 stocks, and today the markets are again having a huge up-day.

This type of blatant manipulation and rule-changing is destroying people's ability to trust in a fair and orderly market. People are quickly losing any idea of the markets being fair, which may lead to people simply leaving the markets. When people who rationally bet on market declines leave the markets, who will be there to take the other side of trades?

Apparently politicians and regulators believe markets (except commodities and gold/silver) should always go up, and will take what manipulative and socialist steps that are needed to ensure markets go up. The markets and underlying economic problems will still need be worked through, so this temporary reprieve may get the politicians through the upcoming elections and into 2009. Problems still need to be addressed, particularly in the overvalued housing and commercial property sectors.


The Fix Is In for Stocks
By RANDALL W. FORSYTH | MORE ARTICLES BY AUTHOR
But underlying economic fundamentals need to be addressed in addition to the crumbling capital markets.
THE OVERHAUL IS COMPLETE, or nearly so.

In less than a fortnight, the American financial system has been all but remade top to bottom.

First, the mortgage giants, Fannie Mae and Freddie Mac, were formally made charges of the federal government (in every sense of the word, to the tune of $200 billion initially.)

Then, two of the most storied names on Wall Street, Merrill Lynch and Lehman Brothers, were set to disappear -- the former into a purchaser, Bank of America (ticker: BAC), the latter in the bankruptcy court.

And American International Group (AIG) was bailed out by an $85 billion loan from the Federal Reserve, granting an insurance company a lender of last resort.

And when that failed to calm the market, imperiling the continued independence of last remaining major U.S. investment banks -- Goldman Sachs (GS) and Morgan Stanley (MS) --Washington on Thursday gave notice it would do whatever it took to stop the pain.
...