Naked short selling. Modern financial sin

Heard the phase "naked short selling" on the radio this morning. New one on me. Visions of middle aged stock brokers pole dancing on conference room tables passed thru my mind. The Vermont Public Radio story alleged that short selling was responsible for the fall of Fannie and Freddie. This sounded so juicy that I googled for it, and found definitions.
Apparently ordinary short selling (selling a stock you don't own, waiting for the price to fall, and buying it at the lower price to deliver to the previous buyer) is now "naked" short selling. It isn't illegal per se, at least not in the US, but the SEC frowns on the practice. They prefer "covered" short selling, where in the seller "borrows" the stock, sells it, and then buys it back later to repay the lender of the stock. Naked short selling for the purpose of effecting a stock's market price is forbidden. Another one of those highly effective laws. "No your honor, I never intended for my short sale of two million shares to lower the price of ..." More welfare for lawyers.
Even in this day and age of gigahertz computers, sellers have three business days to deliver the stock to the seller. That's three days to allow the stock price to fall and make the short sale profitable. If the SEC really wanted to make short selling go away, they could shorten up the delivery time to something reasonable like three hours after the market closes for the day. And prohibit paying over the money before delivery of the stock.
There is a small number of "failure to deliver" events in the ordinary course of business. You could clamp down on that with stiffer penalties. Taking money and not delivering stock is straight out fraud.
As for Fannie and Freddie, whose stock is in the tank. Both companies have lost a lot of money this year and everyone expects them to loose a lot more in the future. Stocks are only worth owning if they are expected to go up in price. If the company is loosing money, its stock isn't going up, everyone knows this. So stockholders sell while the stock is still worth something.

We don't have enough troops in Afghanistan

"because all the troops are in Iraq. Barack Obama said that on TV yesterday. Not true. If we don't have enough troops for Afghenistan, it means the Army isn't big enough. Or too many Army troops are paper pushers, button pushers and REMF's, and not enough are infantry. We only have 130K troops in Iraq. Compared to WWII, Korea, Vietnam, and Gulf War I, that's nothing. We need an Army /Marine Corps big enough to deploy 250K troops overseas.

Obama on Iraq

Watched Obama on TV today. He started out, lambasted the war, decried the expense, blamed just about everyone. I'm saying out loud to the TV, "Come on, tell me what you going to DO about it." Finally Obama got around to saying he would withdraw American troops. If you are into tea leaf reading, he did NOT restate the "one brigade a month" timetable, but I think that's nit picking. He did say clearly that he would pull the Army out.
Obama claims he is turning Iraq over to the Iraqi government. I think he's turning Iraq over to Al Quada.
Just to show he is tough, Obama promised to reenforce Afghanistan.

My internet blackout, Part 2

So, after the very nice Time Warner service man called, Trusty Desktop ran fine til bedtime. This morning, I powered him up, and lo and behold, it was just as broke, and broke the same way, as before the service guy arrived. Same deal, the laptop (Angry Pierre) worked and Trusty Desktop didn't. After a couple of hours of messing around, I finally disabled the Zone Alarm firewall. Presto, internet came back.
So, I used Add/Remove Programs to zap Zone Alarm for good. Turned on the less effective built in Windows firewall. In actual fact the Netgear router is a very good firewall, and hackers/crackers/spyware and such get stopped by the router. I checked the Zone Alarm logfile and it hadn't seen an attack since it had been installed. So, for now, bye bye Zone Alarm. Been running Zone Alarm for years and years, without trouble, but looks like it's broke now.

Fannie & Freddie

Ray Suarez was interviewing US Rep. Barney Frank on the news hour last night. Barney was defending the Fannie & Freddie bailout. They got into the history, and Barney was very firm that the entire disaster was caused by a lack of regulation, and of course he, the democratic party and the US house had pushed for appointment of a regulator. The evil Republicans in the Senate had failed to approve Barney's pet regulation bill, and so the Fannie & Freddie disaster was all the fault of Republicans.
A regulator was going to save Fannie & Freddie? A clueless back seat driver overseeing company management is going to raise their stock value, sell their bonds and prevent a wave of foreclosures? Maybe in Barney's universe. Barney is very smart, very liberal, Jewish, and from Brookline Masschusetts, a town that makes the People's Republic of Cambridge look conservative.
As it is, looks like Fannie and Freddie's $5 TRILLION dollars of debt is going to be added to the existing $9 TRILLION dollars of the existing federal debt. Scary. That's an unbalanced budget that will never quit.
The other option would be to tell the Fannie and Freddie bond holders that they won't get paid, they are out $5 TRILLION bucks. That will make a load of unhappy investors, pension funds, banks, builders, real estate brokers and every one in the housing business. Law suits will go on for 50 years. Without Fannie and Freddie, banks will have to relearn how to do mortgages and attract depositors, and mortgage money will be very hard to get. It will damage the credit of the United States, making it harder to sell US treasury bonds to the Chinese. All in all, the "let 'em crash" option is even scarier than absorbing $5 trillion of debt.

My broadband connection just came back

It was Thursday last week, I powered up my trusty desktop, and oops, no internet. So I did the usual thing, pull the plug to the cable modem and the Netgear router, and then plug 'em in again. No dice. Hmm, maybe the network is down? Sometime after lunch I decide to wade thru the voice mail hell that is calling for technical assistance. My first calls get to pleasant sounding but clueless young ladies at an overseas call center. Some persistence gets me through to the service center in Maine. The lady at the service center says the network is OK, and then she interrogates my modem remotely and it says it's OK, but "the receive signal is a little weak". We schedule a service call for Monday.
I decide to keep blogging on Word. Bloggable ideas are getting scarce, and if I don't write 'em down when they occur to me, I forget them.
Monday morning arrives. I decide to double check. I pull my daughter's discarded laptop out from under the bed and plug it directly into the router. Bingo, beatup laptop logs on immediately and I can catch up on Instapundit. Wow. maybe it isn't the cable modem stuff.
Trusty Desktop is connected via a wireless card. I had a cable built into the house, but I never used it, 'cause the electrician didn't crimp a connector on the end and I found I could buy the wireless card for less than the proper crimping tool for the RJ-45 connector used on LAN cables. I snip the connector off a spare LAN cable and splice it onto the cable to the desktop. Strip, twist together, solder, and insulate with heatshrink tubing. There is an industry standard for the color codes of the 8 wires inside LAN cables, you just have to match up the colors.
Plug the newly spliced cable in, go upstairs, and try the desktop again. The task bar icon shows "connected" on the wired LAN, and I can ping the router box. But, still can't get on the net. So I have one computer that gets on the net and a second one that won't. Arrgh.
About this time the Time Warner service guy pulls up in a van. He pulls a brand new cable modem out of his truck and installs it. The new modem is about half the size of the old one, and presumably has spiffier semiconductors inside it. It powers up and bingo, BOTH computers now can get on the net. Dunno how that happened, but it did.
Logic says that if one computer can get on the net, the cable modem is OK. So, either that ain't so, or the desktop just decided to stop being cranky, or something. Let's see how long things last.
So I posted the last few days of blog ideas a few minutes ago, and how it's time to catch up on the email.

Political talk that ain’t worth your time.

I watched a long TV discussion between Newt Gingrich, former speaker of the house, and E.J. Dionne, Washington Post columnist. Dionne would review various political ideas and classify them as “liberal” or “neo conservative”. He didn’t discuss the goodness or badness of the ideas, he just attempted to label the ideas he liked “liberal” and the ideas he didn’t like as “neo-conservative”. Newt did somewhat better, he did try to bring the debate around to real things, such as the decision to disband the Iraqi army, but Dionne wasn’t having any. He didn’t want to talk about the merits of ideas; he just wanted the viewers to agree with his ideas about good and bad. In short, Dionne was not willing to reach out to voters and citizens and appeal to their heads. He appeals to their partisanship.

So do all the TV talking heads who use the phrase “flip flop”. They are not attacking the ideas on the merits; they are accusing the speaker of going back on his sworn word. So does Obama when he rails against “Bush’s third term”. If he doesn’t like ideas, why not explain why he doesn’t like them?