In our earlier article we explained how speculation was crushing our financial institutions in the same way it drove oil artificially to nearly $150 a barrel. Market Watch confirms this with this quote.
Last week, short sellers focused on the perfect storm surrounding Citigroup, selling the shares in unprecedented volume as the concern about the scale of recently unveiled job cuts added to fresh fears about a quickly deteriorating commercial real estate market, as well a surprise decision by the Treasury earlier this month to forgo purchasing troubled assets form firms like Citigroup.
In 1987, the stock market crash was examined, and safeguards were put in place to prevent the crushing market action we saw in October of that year. The linked article explains the safeguards and short selling.
We have removed some of those safeguards, giving billionaires and hedge funds the ability to use fear to their advantage.
The shoring up of Citi sends a message to these speculators. If you attack our banks and short them, we will hurt you. We need to send an even stronger message just as we did in September when a temporary moratorium on short selling financial institutions was put in place. Doing this again, combined with a reinstatement of the uptick rule, would devastate short sellers manipulating US Markets.
This morning’s action has sent Citibank back up sharply and we believe further action is needed to snuff the speculators.