I have been a utilities bear off and on, and just a couple of days ago, I mentioned how I was getting back into SDP in a big way. Never again. Let me explain why.

In the past, when people would talk about how market makers would "gun for their stops", I would take these as simply rantings of a person who didn't want to take responsibility for his own mistakes. But, in some cases, there really is truth to this.

SDP (which is a double inverse based on the Dow Jones Utilities Index) is quite thinly traded. FAS, for example, was only introduced last November, and it already trades about 50-80 million shares per day. SDP, on the other hand, trades maybe fifty thousand shares a day.

So this morning, not long after the open, I found myself completely stopped out of two large SDP positions. I was puzzled, since the market wasn't moving that dramatically. So I took a look at the graph. Note the highlighted portion:

01

Yep! That's my trade! Nearly 10% below the "normal" trading of the day.

So I got taken. From now on, if I want to do anything with utilities, I'm going to stock with other instruments, like XLU. Good-bye, and good-riddance, SDP. I've had enough.

Even though seven years have passed, Enron is probably a company whose scandal you remember. The simplified version is something like this: you had an organization which:

1. Had some performing assets and some very bad investments;
2. Set up some "off-balance partnerships" into which they could move the bad investments;
3. Propped up an untenable situation by leaving only the good stuff, thus creating the illusion of prosperity

So I ask you this: what is the difference between what Enron did and what the US Government is about to do with the "bad bank" proposal? Remember, people went to prison or put bullets through their own heads because of Enron.

Indeed, I would say what Enron did was actually better than what the Feds are proposing, because at least those who suffered due to the fraud did so at their own choosing. In other words, they elected to buy (and hold on to) Enron stock. ENE was falling a long, long time before the scandal broke and the stock truly collapsed. Anyone with even the most basic knowledge of a chart would have exited ENE safely.

The bad bank, however, forces the entire country to be saddled with toxic "assets." There isn't a way to sell.

I don't imagine anyone is going to wind up going to prison over this one. It's a million times worse than Enron ever was.

When I got the registered letter from the Treasury Department, I was naturally concerned. But the plans they laid out inside gave me a welcome sense of relief. It turns out that our government finally recognizes that plenty of financial blogs out there, mine included, have done some posts in the past which were subprime. On the whole, there are bad grammar choices, clumsy prognostications, jokes made in poor taste, unsettling images, and offensive comments.

I've never felt comfortable actually deleting any old posts, since I believe my writing should stand on its own, but the government has offered to buy up these "toxic posts" and bundle them together into one large Bad Blog. Of course, Slope isn't too severely affected, but some blogs are. The Fly's blog alone has been weighing on the U.S. dollar for months, and the rampant misspellings over in Lindzon-land were part of the chaos behind this autumn's plunge in energy prices.

I, for one, welcome our new Treasury overlords. And I will leave you this quote from Cicero, dated 55 B.C., sent to me this morning by a thoughtful reader. It goes to show you just how wise we've become over the ensuing two millinea.

"The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt. People must again learn to work, instead of living on public assistance."

Well, the /ES has pushed up high enough (umm, what are these buyers thinking?) that I'm entering a small position (10 contracts) at $855. We are close to a high-probability retracement level; I'm a little squirrely about this position, but I'm open to a small risk at these prices.