November 20, 2008
Here is how to solve the current credit crisis without throwing Trillions of Tax-payer dollars.
1) Repair the structural flaw introduced by SEC when they eliminated the uptick rule.
The financial structure that had been standing for over 80 years was weakened when the SEC removed the safeguard of the uptick rule thereby creating a critical flaw in the financial systems.
Short selling is like a battering ram which gains momentum with each passing stroke. And when this battering ram successfully takes down wall after wall, even spectators join the game and add to the momentum. The uptick rule created an important cushion and lessened the effect of momentum.
2) Require that shares to be shorted must be preborrowed
3) Require mandatory buy-in at T+3 for FTD shares.
These actions are Fair. They can be easily implemented. They will solve the current crisis in stock markets at zero cost to taxpayers.