Is market 'fix' tomorrow's crisis?

Helping taxpayers -- and the GOP?

Changing the rules to cause stock prices to advance would save the government the billions of dollars it would take taxpayers to recapitalize the banking system. If this method is used rather than a straightforward, inflationary "money print" -- otherwise known as inflation -- it would have the effect of strengthening the dollar, which in turn would push down commodity prices.

If all of that were to occur ahead of the November election -- new banking system rules, a lift for financial services companies' shares, a stronger dollar and lower energy prices -- it would create a stock market rally that would naturally benefit the incumbent party.

Not that I would be so cynical as to suggest something like that might be up.

This is an out-of-consensus view, which makes it all the more intriguing. It has some merit because we can see that the widespread short-selling in financial stocks in evidence in early July was squeezed extremely hard over the past two weeks and again Tuesday.

Because one of the more successful trades of the past year at hedge funds has been to buy energy stocks and sell financial stocks, the squeeze might very well have had the effect of forcing hedge funds to liquidate their long positions in oil, natural gas, coal and agriculture to pay for margin calls.

Forgetting the decline in crude oil for a moment, which has been relatively minor, I don't know how else to explain the mind-boggling decline in natural-gas prices lately.

Futures have plunged to $9.20 from $13.65 in a month with no change in the weather, hurricane season or Asian demand.

In summary, a year into the debt crisis, we have to be open to the idea that the next step is for the government to try to use every lever at its disposal to change the rules in order to revive the financial system, restore banks' balance sheets, get bank stock prices up and reignite the broad market.

We'll know well before the second anniversary of the great credit disaster how well that's working.

Fine print

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Meet Markman at The Money Show

SuperModels columnist Jon Markman will be among more than 50 investing experts sharing tips and techniques at the 30th anniversary of The Money Show in San Francisco, Aug. 7-10. More than 150 free workshops will help refresh your perspective and prepare you for whatever the market does next. Admission is free for MSN Money readers.

To register, call 1-800-970-4355 and mention priority code #009552, or visit the Money Show San Francisco Web site.

At the time of publication, Jon Markman did not own or control shares of any company mentioned in this column.

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