America's financial system is a mess and the U.S. Securities and Exchange Commission is to blame.

Short sellers, in a concerted effort to defend themselves and abuse the lack of regulation by the SEC, are now targeting Citigroup while our financial journalists, analysts and government regulators continue to do nothing.

At Market Rap we've pointed out correctly again and again the market's new primary targets for short sales, which now require no uptick rule and in many cases are likely not even borrowed shares.

Hartford Financial Services is now under $5 and Morgan Stanley is fighting to hold $10.  But the new target is the giant Citigroup which in five days has lost nearly two thirds of its value.  At under $4, it is a disgrace to watch and be a part of a capital market that is allowing nerdy unethical Wall Street gangster to destroy the world economy. 

Even former SEC Chairman Harvey Pitt stated last night on television: “naked short selling is what’s causing a lot of the problems in the market.”

SEC Chairman Christopher Cox should be in jail for this willful neglect.  It is a travesty for our history books.  It is a national disgrace that it has come to this and still there is no enforcement of rules and no sufficient regulation on short selling.  And where are the exchanges?  Why hasn't the New York Stock Exchange put in stringent rules to curb the abuse of short selling?  Indeed, they have not seen an initial public offering in months.  Why would a private company ever want to be a public company knowing what can be done to them in an unregulated market where nerds can destroy your share value in minutes.

It's painful to be a part of, it's painful to watch and it is a tragedy of epic proportions.  The only positive irony I see in all of it is the fact that the same companies who lobbied for the short sellers are now victims of the nerdy gangs they themselves helped create.  They are eating each other alive and looking for their next victim.  They have an insatiable appetite for stocks to short because that is how they do their business.

But it is not an efficient market when half or more of a fund's money is committed to essentially betting down companies.  How is that a positive contribution to the world you are a part of?  How much longer must we put up with a lack of regulation for a mechanism of trading that is being overused and abused.  It's time for investors to call their representatives and push for them to act immediately for the sake of the entire global financial system.