"B A R R Y" wrote

In 2007, The "uptick rule" was eliminated in the US stock markets. This
allows hedge funds to grossy short stocks, in some cases greatly hurting
the market cap of a company.

The "uptick" or short selling rules have been reinstated. This originally
were imposed as a result of Joseph's Kennedy's pulling enormous amount of
money out of the stock market during the 1929 crash. It was an anti Kennedy
rule.

The big problem was not so much the short selling, which can work quite well
as eveidenced in the futures and currency markets. It was the practice of
"naked short selling". It was the ability to make a trade without putting
up any of your own money. No matter how highly leveraged the futures and
currency markets are. you put your own ass on the line with every trade. And
you have the funds to back it up. The exchanges have strict margin
requirements.

If you have a bad trade, you pay for it. And if you can't, your broker
does. This keeps the traders honest. And this is strictly regulated. Some
margin requirements were changed for a short while about three months ago.
These were rescinded because nothing had changed and the risk was being
addressed in the way that it had worked will for quite some time. That said,
some brokerages that handle commodities and futures are tightening up on
their margin requirements.

Anyway, what had occurred recently by the big boys speculating in stocks was
that they were making some vry big short sells WITHOUT PUTTING UP ANY OF
THEIR OWN MONEY. This is what John Mc Cain has been referring to as not
having any skin in the game. The whole problem with the subprime martgages,
etc has always been is that the folks who make the loans pass them off to
others. And that is exactly what the stock short sellers had done. Without
any risk to themselves, they make others pay for their trades. Indeed, in
many ways, they fueled a market that may not have existed as strongly as it
did because of their naked short sells.