In keeping with their tradition of protecting the old boyz club at all costs, this highest priority objective was satisfied by today's SEC 1:00 pm emergency announcement of reducing short selling of FNM, FRE, LEH, and other Wall Street firms. Therefore, if short selling was killing these stocks, one would have expected major short covering to occur immediately after. However, if one looks at the daily charts for FNM, FRE, and LEH below, it is revealed that no short covering occurred at 1:01 pm and that all three stocks finished much lower on the day. Or as Mike Shedlock noted this afternoon: "Shorting curbs cannot possibly help when the problem is solvency not liquidity. In spite of the announcement, shares of Fannie and Freddie are down another 19% each as of 1:40 PM Central. If the SEC intended to cause a short covering rally in the GSEs, it sure failed miserably. Indeed, the market response shows just how futile the actions of the SEC, the treasury department, and the Fed are."

And as Jesse added as well: "How thoughtful of the SEC to come to the aid of the primary dealers, the Wall Street banks, after virtually ignoring the naked short selling problem in the markets for the past eight years." Even better is the fact that the SEC can suddenly identify suspicious short selling activity of their buddies after only about a month or so but are completely blind to the "set your watch" suppression of gold and silver.

It could also mean that the SEC's tools for accurately monitoring short selling positions, something they were "supposed" be watching and enforcing if necessary for several years, is totally flawed. This possibility may have some merit because their watchdog cousins, the FDIC, are supposedly closely monitoring the status of banks on the edge and have recently stated they have 90 banks on their list. But again, since IndyMac wasn't on their watch list consisting of 90 troubled banks, how effective are these watchdogs?

Just a few thoughts on corruption - VHF

-

Chart 1 : Fannie Mae Daily

Chart 2: Freddie Mac Daily

Chart 3: Lehman Bros. Daily