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One of my favorite literary devices is the use of the self-answering question: Who's buried in Grant's Tomb? How many letters are in the number four?

Well BusinessWeek has a great one (albeit cheating a little bit because it contains a declarative and a question) in the lead to its story on the recent ban on short selling in financial stocks: "During the nearly three-week ban on shorting financial shares, the market sank 21.5%. Are regulators after the wrong parties?"

It's probably a stretch to try to conclude that the temporary ban on shorting financials really hurt the performance of the market -- there was plenty of bad news driving down stock prices. But maybe it actually did play a role. According to BusinessWeek, "If anything, the ban on selling short seems to have exacerbated market volatility by depressing trades in the options market and forcing investors who couldn't hedge their long stock positions to take offsetting options to sell their stocks."

I'll offer another suggestion: I think that the SEC might have freaked out a lot of investors by sending the message that things are such a mess that it was necessary to change the rules -- in essence, to cheat -- to prop up the market.

Now the shorts are back for their first full week, and the market is set to open with big gains. Time to move onto the next scapegoat -- anything to avoid the dreaded mirror.

With the economy in the toilet, a lot of people are reluctant to go and spend big on restaurant cuisine.

By itself that would be a good reason not to invest in restaurant companies. But restaurant stocks have been absolutely smoked of late, so you have to wonder how much of the bad news is already priced in. Take a look:

• DineEquity (NYSE: DIN), parent company of IHOP and Applbee's: closed on Friday at $11.13, 83% off its 52-week high.
• The Cheesecake Factory (NASDAQ: CAKE): closed Friday at $10.96, 56% off its 52-week high.
• CKE Restaurants (NYSE: CKR), parent company of Carl Jr.'s and Hardee's: closed Friday at $8.88, 47% off its 52-week high.
• Starbucks (NASDAQ: SBUX): closed Friday at $11.08, 59% off its 52-week high.

With very few exceptions, restaurant stocks have been pulvarized of late. It's true that the bad times may last awhile longer but in the grand scheme of things, a few quarters -- or even a few years -- of poor sales and earnings have very little bearing on the creation of long-term shareholder value. That is if a company is well-capitalized and has little leverage.

I think bargain hunters who buy and hold restaurant stocks trading at low price/earnings ratios with very little debt and strong brands will do quite well here.

One stock to avoid: DineEquity, which trashed its balance sheet with the Applebee's acquisition and may have to head back to the market to raise cash at the expense of current shareholders. The Wall Street Journal reports (subscription required) on unprecedented promotions and store closings for some leading chains.

With closings and consolidation, well-managed companies with good balance sheets should come out of this mess OK, and investors who get in at depressed prices should prosper.

With SEC Chairman Chris Cox using his light saber to battle the imaginary sith lord of naked short selling, SEC Inspector General David Kotz has released a fourth report criticizing the commission for its oversight of Wall Street over the past two years.

According to The Wall Street Journal (subscription required), Kotz found that the SEC's Miami office dropped a case against Bear Stearns "and others despite negotiating a $500,000 settlement with the investment bank for failing to supervise a former employee. The case, which was described as 'strong' by at least three enforcement staffers, was dropped without being presented to the five-member commission for a vote."

The head of the Miami office, David Nelson, told Bear Stearns lawyers that "Christmas is coming early" this year, and "Bear Stearns can keep their money." The case involved an employee who was alleged to have given inappropriately high valuations to bonds and loans held by a Puerto Rican bank.

The SEC's enforcement staff responded to the report by saying that it is "misleading, and all too often relies on speculation and innuendo to support its harsh conclusions."

Harsh conclusions? You mean like the collapse of the financial sector and a $700 billion taxpayer funded bailout?

It's unclear whether a $500,000 settlement would have changed anything, but the announcement might have tipped off investors to the huge problems at Bear Stearns before it was too late.

Since trading close to $25 per share in early 2007, shares of the former Hansen Natural (NASDAQ: HANS) heir-apparent Jones Soda (NASDAQ: JSDA) have tanked. They closed on Friday at a stunning 75 cents per share, down more than 27% on the day.

On October 6th, the company reduced its workforce by 38% to 68 employees, adding that termination and severance expenses were not expected to be material. CEO Stephen Jones said that "Given the financial crisis we're in, you have to preserve cash. Cutting back people is a horrible thing to go through, but you do it as a result of strategy. And my strategy is to focus on the core of what Jones Soda is."

Jones (whose surname is a coincidence) told Fortune Small Business about an ambitious plan to focus on core strengths, reduce sales to discounters, and bring the company back from the brink. Maybe that will work but, either way, the stock looks interesting at its current price. With a market cap of about $20 million, Jones Soda had tangible shareholder's equity of about $27 million at the end of the second quarter -- including nearly $20 million in cash and short-term investments.

The Wall Street Journal reports (subscription required) that General Motors (NYSE: GM) was recently in discussions to acquire Chrysler from Cerberus Capital Management, the private equity firm in the unpleasant position of owning that train wreck.

Once you learn the details, it's not quite as dumb as it sounds at first. According to the Journal, "Cerberus proposed a swap in which GM would acquire Chrysler's automotive operations, and in turn give Cerberus its remaining 49% stake in GMAC."

Given what a mess GMAC is, the proposal provides an idea of what Cerberus thinks of Chrysler's long-term prospects. It's a little bit like a few college students trying to trade 98 Degrees CDs for Dawson's Creek posters.

It's pretty much moot because the events of the past week have made a deal of this size impossible to put together, at least for now. But it's still interesting to think about. Given what a dump GM is, it's hard to imagine that an acquisition of this size and complexity would help matters. CEO Richard Wagoner (seen at right mulling the merger) already has his hands full.

GM insists that bankruptcy is not on the table. But so does every company -- until it files.

In a stunning reversal of fortune, Chesapeake Energy Corp.'s (NYSE: CHK) CEO put out a press release after the close of trading on Friday disclosing that he "involuntarily sold substantially all of his shares of Chesapeake common stock over the past three days in order to meet margin loan call."

Aubrey K. McClendon stated that "I am very disappointed to have been required to sell substantially all of my shares of Chesapeake. These involuntary and unexpected sales were precipitated by the extraordinary circumstances of the worldwide financial crisis. In no way do these sales reflect my view of the company's financial position or my view of Chesapeake's future performance potential. I have been the company's largest individual shareholder for the past three years and frequently purchased additional shares of stock on margin as an expression of my complete confidence in the value of the company's strategy and assets. My confidence in Chesapeake remains undiminished, and I look forward to rebuilding my ownership position in the company in the months and years ahead."

Read the Form 4 here. It's a little bit sad to watch this happen. McClendon's stake in Chesapeake landed him at number 134 on the 2008 Forbes list, He is also a part owner of the NBA's Oklahoma City Thunder.

It's now clear what one major driver of the sell-off in the company's shares this week was -- it may have presented a buying opportunity and, while it's sad to see someone wiped out, this aggressive insider buys with borrowed funds indicate strong confidence in the company.

Back in July of 2007, Jim Cramer -- who is a very smart guy -- conducted an interview on TheStreet.com (NASDAQ: TSCM) website, where he told Farnoosh Torabi that the subprime crisis had "absolutely no relevance" and added that the media was making a big deal out of it to try to look like they knew as much as the hedge fund managers.

Ooops. Let me be clear: I'm a big fan of Mr. Cramer, and I watch his show regularly. But the bottom line is that, when it comes to predicting the future of the market and analyzing issues as complex as this -- no one knows anything.

With the Dow Jones Industrial Average set to close down at least 600 points, MarketWatch is opting for some gallows humor.

The Countdown to the close banner at the top of the screen is sponsored by "Jack Daniels: Best Enjoyed Responsibly."

Is this an innocent mistake, or are the fine people at MarketWatch indulging in irony? We may never know.

With General Motors Corporation (NYSE: GM) begging the federal government for cash in the face of a deteriorating balance sheet and a hideous fundamental outlook, Standard & Poor's has placed the company on credit watch negative. S&P says the company has adequate liquidity for the balance of 2008, but that the outlook is murkier for 2009.

Shares of GM are currently down more than 20% but, suspiciously, had been lagging the market badly long before CNBC broke the story about the rating move.

I consider myself a big believer in contrarian investing, and I'm certainly not one of the "Sell stocks now! It's only going to get worse" crowd, but it's hard for me imagine how things will get better for General Motors. The balance sheet's a mess, the industry's in trouble, and General Motors has to battle with leaner overseas competitors. Don't even get me started on the legacy costs.

GM will probably bounce around, but it's hard to imagine that it's final destination will be anywhere other than bankruptcy.

Here's a graphic a friend sent me that requires no explanation. Enjoy:

After receiving an $85 billion taxpayer bailout, you would think that the executives at AIG (NYSE: AIG) might have moderated their lavish lifestyles and behaved like the de facto civil servants that they now are.

But during a House Oversight Committee hearing, Rep. Elijah Cummings, D-Md, described what actually happened: a vacation:

After the bailout of AIG last month, the United States government effectively bought an 80% share in the company. That should have caused a fundamental change, you would think, in how the company was spending funds on compensation, bonuses and benefits.

With financial institutions imploding in a wave of writedowns -- and executives who delivered mind-bogglingly bad performance walking away from the wreckage with millions -- Carl Icahn is seizing on the current environment to push his agenda on corporate governance reform.

Icahn announced today that he is forming United Shareholders, a lobbying group, to push for legislative reform that would outlaw shareholder-unfriendly corporate bylaws like poison pills and staggered boards.

Lobbyists get a lot of bad press, but this sounds like one effort that will actually be promoting the interests of ordinary investors. In recent months, we've seen the dangers of bad governance and poorly-aligned pay packages that induce executives to take excessive risks.

It seems that Icahn, who has spent most of his life building one of the largest fortunes in the world, is now looking out for his legacy. If Icahn's lobbying and blogging efforts have any effect on the way companies are run, it will be a good one.

The Wall Street Journal's 'Heard on the Street' column reports (subscription required) on the less than impressive results of recent stock buybacks at public companies.

When a company buys back its stock, it pays cash to shareholders for their shares, and the retires them -- in a market where the vast majority of stocks are trading well of the highs the market reached last year, many recent buybacks are looking poorly-timed. The Journal writes that "General Electric (NYSE: GE) bought back $29 billion dollars of stock, paying an average of $36 and change for each share, according to regulatory filings. This week, it sold $12.2 billion worth for $22.25 each (before fees) and put $3 billion worth of warrants, with the same strike price, in Mr. Buffett's pocket."

The column goes on to argue that dividends "make for better financial discipline and more transparency." Of course that's easy to say right after the market has tanked, but it's a pretty illogical conclusion.

The main argument against dividends is that they're incredibly inefficient, adding an extra 15% cost. A company that pays out a large portion of its income as a dividend is effectively lowering its margins by 15% -- a move that seriously hampers long-term value.

Of course it's unfortunate that GE bought back so much stock only to sell it again at a lower price, but it's a mistake to form general theories about corporate governance based on anecdotal evidence culled from a once-in-a-generation credit meltdown. Given that shareholders of publicly companies presumably feel that their stocks represent a good value, it makes much more sense for corporate brass to hand them more stock with buybacks instead of cash to pay an extra tax on.

The Wall Street Journal reports (subscription required) that private equity heavyweight JC Flowers & Company recently told its investors that it had marked down $6.5 billion worth of holdings by 30%.

That's not good news but it's interesting to note how much worse off Mr. Flowers would probably be if he'd been able to do all the deals he wanted. In 2007, Flowers was set to pay $25 billion for student lending giant SLM Corp. (NYSE: SLM). That deal fell apart and the stock is down about 80% since then on credit market turmoil. Flowers was also a contender for Bear Stearns.

But Flowers isn't backing down. He recently raised $2.5 billion last month for a third fund and received regulatory approval to buy a small Missouri bank.The Journal adds that "Although it is a flyspeck of a transaction -- the bank has just two branches and $14 million of assets -- the deal provides Mr. Flowers a base from which to acquire failed banks or their deposits."

Recent gaffes aside, Flowers has an excellent reputation as a bargain-hunter, and the fact that he's building his war chest with an eye toward the financial sector should give investors something to think about.

Given the continued deterioration in the financial markets and mortgage industry, it seems likely that Bank of America (NYSE: BAC) badly overpaid for Countrywide Financial -- if the company's equity was worth anything at all.

This latest bit of news won't help. Attorneys general offices in California and Illinois have negotiated a settlement with the lender that will require Countrywide to modify terms on tens of thousands of loans. The settlement will offer strapped California borrowers $3.5 billion in relief, and if all 50 states sign on the total price could soar as high as $8.7 billion, according to the Illinois Attorney General's office. So far, Arizona, Connecticut, Florida, Iowa, Michigan, North Carolina, Ohio, Texas and Washington have joined Illinois and California in the deal.

In a statement, California Attorney General Jerry Brown Jr. said that "Countrywide's lending practices turned the American dream into a nightmare for tens of thousands of families by putting them into loans they couldn't understand and ultimately couldn't afford."

Of course, Bank of America knew going into the deal that it would have billions in litigation expenses to deal with but the downward spiraling of the economy has given CEO Ken Lewis a lot less margin for error. There are still shareholder class-action lawsuits and piles of consumer litigation to be sorted through, and, at a minimum, he has to be wishing he'd saved his ammunition to acquire cheaper assets in the midst of the carnage.

Long-term, it seems doubtful to me that the Countrywide Financial brand has any value at all. Why would anyone go to the poster child for the biggest real estate meltdown in history for a loan?