Jim (cont'd):     

This should be a bigger scandal than Madoff's alleged Ponzi scheme, because the shorts truly dead come close to sabotaging our financial system... to precipitating a second Great Depression... and, as it is, they laid to waste these stocks... and were only stopped by the generous Citigroup bid on November 24... the first true bail out, by the way, from our government... because it was the first that didn't punish the banks and their shareholders, and actually let them come out ahead.

But I don't blame the shorts... they were just trying to make money in an environment where the regulators have totally dropped the ball and the banks involved are owed too much money... If you want to point fingers, and believe me we should be pointing fingers, SEC Chairman, Chris Cox, is responsible for the short selling slaughter of the financials, not to mention the Madoff scandal... All day today, I heard people blaming the SEC... No, blame Cox... The SEC wasn't always bad... Cox created a total wild West atmosphere...

So what are the numbers look like?... How much of the fall in the financials is because of short selling?...

Just in the 12 trading days leading up to the Citigroup bail out, selling accounted for over 49% of the total volume of shares sold in Citigroup... 49%... It was 41% of the shares sold in J.P. Morgan... 35% of the shares sold in Bank of America... 40% of the shares sold and Goldman Sachs... and 37% of the shares sold in Morgan Stanley... 42% of the shares sold in Wachovia... and 42% of the shares sold in Wells Fargo...

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These numbers are much higher than you've heard ever before... and they are the real deal. We have them courtesy of the source who works in the New York Stock Exchange...

What happened to these stocks as the shorts ran wild?...

Well, how about this?... Citigroup fell 69% in those 12 days, from $12.48 on the opening on November 6, to $3.77 at the close November 21. That almost broke the bank. J.P. Morgan fell 41%, from $38.96 to $22.72. Jamie Dimond, please take note... Bank of America fell 46%, from $21.62 to $11.47. Ken Lewis, take note... Goldman Sachs fell 38% from $85.91 to $53.31... Morgan Stanley, 39% from $16.66 to $10.05... John Mack did note this... he should have used these figures... I would have felt better about his screen... And even stalwart, Wells Fargo, took a 27% hit, falling from $29.78 to $21.76.

All of these stocks down on enormous volumes... yes, of short selling...

And it's even worse... it's worse than that... When you look at the daily numbers, you can see exactly how the shorts would shove these stocks down, creating panic and causing regular investors to sell.

You have to remember, banks aren't like other companies... they rely entirely on confidence and, when people see the stocks get pushed down, they pull out their money from the banks, or from investment banks... and that hurts the company. This is not Exxon or Kellogg, where we will stop pumping gas at Exxon or stop beating big K. cereals... This is not even like GM or Ford, either way where, as long as they are solvent, some people are willing to buy...

We just don't think about stopping to use anything other that banks, when their stock gets hurt...

These attacks cause and enormous amounts of damage...

These are astounding figures. They are the type of figures that, if we had a Congress, they would get a hold of them and demand a return of the uptick rule, and end the tyranny of the shorts with Cox backing them at the vanguard, as Cox unleveled the playing field against you...

Now, I defy anyone to look at these numbers and tell me that the shorts didn't play than an enormous role... perhaps even the key role... forcing down the financials, causing runs on the banks, and giving us this chaos that we have. You can't say the shorts don't matter, when they account for more than half of the selling on any given day in the financials...

Again, give the shorts their due... the banks were poorly managed... they had way too much debt... but this is the evidence for what I've been saying all along... that the short sellers aggressively knocked these stocks down, in order to create panic and cause regular investors to flee, and regular customers to pull out their money... and it worked. It worked...

Oh, on a related note, thank you Wall Street Journal... for finally waking up to the power of ETF's to push down the market at the close... Of course, I've been talking about this damage that the turbocharged ETF's for weeks, even months... but I doubt anyone there was paying attention. They only want to write nasty stories about me, anyway, so maybe it's just as well that they left me out... that I broke the story...

The bottom line...

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The Bottom Line!:     The short selling we saw in the financials was and is the rule... This is something the next SEC Chairman must examine, because we know Chris Cox won't do a darned thing, because he either doesn't understand and is very unsophisticated, which is entirely possible... didn't understand what happened... or because he is such an ideologue and is so anti-regulation, that he would rather see capitalism gutted than have the rascals reigned in... This is a true scandal, and it came close to wrecking our financial system.