Now we finally realized how the short selling ban on financials was detrimental to the markets.  It allowed the longs to jump out at a fake bounce created on 9/19 (they said thank you very much and cashed out for a huge profit that they should have never had and went to cash), then made the hedgies and legitimate traders lose a ton of money in return.  Then in exchange they had to engage in forced liquidations in commodities, resort to buying the SKF, and made them furious as hell, which made them say damn the market and sold everything and left...or sold everything and returned by doing nothing but shorting.

Banning short selling in a selected list of stocks was a travesty and was another idiotic move by Chris Cox. 

I don't understand why we can do something simple at least and put in trading curbs on the NYSE and Nasdaq when the indexes gain or lose more than 2%.  That doesn't solve the problem, but makes it more efficient.  We can also put in the uptick rule at a nickel or a dime. 

Here are the remaining last ditch solutions left:

1. Mandate a preborrow requirement before allowing stocks to be shorted and put in teeth to punishments for brokers in violation.
2. One more coordinated rate cuts across the world.  The Federal Reserve can cut a quarter and bring the Fed Funds Rate to 1%.  The ECB, Bank of Australia and Bank of England should all cut 2% each.  The world desperately needs inflation, to avoid going to a deflationary death spiral.  This is in an effort to make all currencies around the world, worth less so stocks and commodities can be worth more.
3. The federal reserve bank should guarantee all inter-bank lending and counterparty trades of fixed income securities between primary dealers.  This could be a massive liability for the Fed, but something that needs to be done to bring something resembling confidence back to the markets.
4. The US Treasury to stop issuing T-Bills completely, which would force cash hoarding indviduals and institutions to put money into banks and brokerages for parking.
5. Create a regulated exchange for credit default swaps and make it illegal for new ones to be written.  They've become nothing more than a backdoor way to naked short sell companies.
6. START THE TARP IMMEDIATELY!

Here are some radical solutions that would amount to chaos but may work:

1. Replace the US Dollar with the Amero which would be permanently deflated and pegged to a basket of commodities and currencies going forward.  The deflation can be optionally used to eliminated the national debt and give the country a restart.
2. The US Treasury should buy the Dow, S&P and Nasdaq futures in massive amounts, which in turn would force market makers and counterparties to buy and not sell stocks.
3. Close the stock market completely whenever the stock market drops 2%.  Traders may get so frustrated they may start buying stocks instead of selling.
4. The federal reserve can open a "preference window" which banks can issue new preferred shares as collateral for borrowing.
5. Close the options markets for equities and only allow closing transactions.
6. Stop short selling in all stocks, and again only allow the options markets to do closing transactions so they can't buy puts either.
7. Seize a basket of struggling large regional banks KEY, NCC, FITB, RF, FED, DSL, BKUNA...merge them into one and take all the mortgages off their hands and give shareholders warrants to profit in any value that may emerge out of their paper holdings.
8. Legalize marijuana, cocaine and prostitution and let people just get high and forget about the market.

Tomorrow we may see the market drop 1000 points, people jumping out of windows, riots on the streets and a complete seize up in the credit markets which would cause LIBOR to jump to double digits.

There is NO SUCH THING as capitulation when you have leveraged unwinding.  Margin Calls/Redemption Requests  => Forced Liquidations at Firesale Prices => Angry Traders Shorting and Buying UltraShorts => Fuel Added The Fire in the Selling => Companies unable to borrow issuing equity => Margin Calls => More Selling => No Buying => Nationalization of more and more of private industry => More Selling and Selling

I will be looking at possible long Oct/Nov calls trades for following stocks:
C is a buy tomorrow on dip to $12 area, completed TDCountdown.
BAC is a buy - double bottom.
GS is a buy at 88, completed TDCountdown.
(opened long XLF Oct16 calls today)

"Tomorrow we may see the market drop 1000 points, people jumping out of windows, riots on the streets and a complete seize up in the credit markets which would cause LIBOR to jump to double digits."

I hope for that drop in one day - DOW will then reach my downside target of around 7500
After that we might see multi weeks/months move higher, and after that most likely scenario you describing.
As scary as it is I have to trade in this wonderfully volatile time - I still need to pay my bills.
DavidDT

P.S. "Riots on the streets"???? Come on this is America, we will bend over and take it like we always did - we still have 6 pack and cable TV to lose.

Wow did you see the strong gains in the dollar? Stop selling T-bills?
http://www.dailyfx.com/story/bio2/Dollar_at_New_Lows_as_1204802496310.html
http://www.dailyfx.com/
1/3 of our debt is in short term T-bills we have to sell them or pony up!

That is the only thing holding our currency together. The deal was we buy up the junk we sold China and they can say they never bought into our ponzi scheme and look good (700 billion bail out). In return they sent 200 billion our way just look at the dollar (T-bills look at 5 and 10 year rates) . Look at the EURO/YEN pair. That would have been us. As it was we lost against the yen big time.
"The federal reserve bank should guarantee all inter-bank lending" they are insolvent why would guaranteeing their money help them become solvent? 
You have to look at shorting this way. I put in a phone call to GS and tell them I want 5 million share of XYZ stock to short. GS then gets the jump on me and shorts before me. That is the reason they can short before they borrow.

With out credit default swaps no one would buy a companies debt.

1. "Replace the US Dollar with the Amero which would be permanently deflated and pegged to a basket of commodities and currencies going forward.  The deflation can be optionally used to eliminated the national debt and give the country a restart."

Deflation would increase our national Debt, inflation decreases it!!!!
I am not sure where you came up with the ideas? I have an IDEA. Stop messing with the markets. It is all good. Much good can come from this!

Sorry the first article shows why the dollar went to 160 against the Euro that was China bailing out until we made good on the 800 billion FNM and FRE debt and the 700 billion bailout to buy China's bad loans.

I sounded really stupid in this post obviously but here's is why capitulation will take place tomorrow.

So the markets melted down on Monday but optimism came in intraday and markets cut their losses.

On Tuesday people took that as good news and thought the market would rally, but instead it took out Monday's lows and tanked more viciously.

Markets were about to meltdown on Wednesday but the rate cuts soothed people a bit and the selloff wasn't so bad.

On Thursday markets really really wanted to rally and for awhile the Nasdaq was rallying hard, but ran out of gas and sold off huge at the end.

Okay now Friday. Everyone thinks the markets will absolutely tank...people are talking 1000 pt drops, riots on the streets, etc. Everyone is talking Dow 7000 by next week, panic is at all time highs, foreign markets tanking and no signs of hope. The VIX will hit 70 and this is when we finally and finally capitulate.

If we don't then rioting will happen on the weekend and Dow will hit 7000 on Monday.

Well the S&P had a P/E of around 20 at $125, now at 90 we come in with a P/E of around 14.4 so look for good companies with little debt and you should be alright. I agree nothing just goes straight down.

I like option 8

Since I am stupid enough to never shed myself from reality with "option 8"
I am looking forward to"If we don't then rioting will happen on the weekend and Dow will hit 7000 on Monday." - at least something positive will happen...at last.

The next logical step would be US Armed forces from Iraq getting back home at once and taking care of business. Imagine every single American who was lied to and betrayed - acting at once? ANd not under influence of "option 8"?

this is as SICK as it will ever get and if things are not going to change - I hope I see the "END OF IT"

How about making all credit default swaps for non-owners of mortgage backed securities invalid?  

I mean come on!  This is counterfeit insurance on a counterfeit security.  Kind of like having fire insurance on your neighbor's house, then walking over and torching your neighbor's house so you can collect insurance.  Fraud.

Goldman Sachs is in freefall (11am Central).  Anyone else seeing this?