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scenes from a meltdown

Bearish on the Bailout

Well! The stock market is rallying and Washington Mutual execs are surely clinking trillion-dollar glasses of champagne, but not everyone is cheering about the government's plan to "rescue" America. Bloomberg's Ann Woolner set a high bar for outrage at Wall Street greed early this morning with her column, evenly titled Sue Them, Jail Them, Make Them Pay for Meltdown "Toss the rascals in jail. Criminal prosecution allows the government to seize ill-gotten gains. Snip the straps off those golden parachutes and grab them. Take over bank accounts, investment accounts, mansions, private planes and yachts." (And raid their pot stash while you're at it.)

Conservatives are totally freaking out: "Our heads are spinning now with the bailout mania," Rep. Michele Bachmann from Minnesota said at a news conference. "First, we were told that Bear Stearns was too big to fail, then we were told that Freddie/Fannie were too big to fail, then we were told that AIG was too big to fail. What’s next, Starbucks is too big to fail?” (Actually, yes, we suspect The People would support a bailout of Starbucks with no problem whatsoever.) "In summary, this plan means our standard of living will drop in order to cover the mess Wall Street made while handing out those multi-million-dollar bonuses," fumed Seeing the Forest. But what's really got everyone's knickers twisted is the S.E.C.'s decision to follow the U.K.'s FSA and institute a temporary ban on short-selling.

The Daily Telegraph called it a "mind-blowingly stupid" knee-jerk reaction.

"To the extent that people are keeping money out of the market because they are petrified of short-sellers, convincing them that less short-selling is going on (even if it isn't) is an easy way to get more capital back into the market," writes Paul Kedrosky of Infectious Greed. "Granted, nothing has changed, but it's a fun superstition, sort of like sacrificing the odd virgin into a nearby volcano....The trouble is, of course, short-selling remains important. They are usually the best-informed traders in an issue, as repeated studies have shown. Their ability to bring prices in line is lost, or at least muted, and that can make subsequent price moves even more wild."

And Dealbreaker remembers what happened when Pakistan banned shorting, which turned out to be unwise. But they have a better sense of humor about it all than Nouriel Roubini, whose post today gave us actual chills. "At this point the perfect financial storm of the century cannot be contained. The only light at the end of the tunnel is the one of the coming financial and economic train wreck." The end?

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Photo: Photo-illustration: Everett Bogue; Photos: Getty Images