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 (C) 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 a flood of short sales, which now require no uptick rule and in many cases are likely not even borrowed shares.

Hartford (HIG) Financial Services is now under $5 and Morgan Stanley (MS) 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 more than one initial public offering in months.  Why would a private…