Thursday, September 18, 2008
SEC set to ban short selling
The Securities and Exchange Commission prepared an aggressive assault against short-sellers, saying it would temporarily prevent investors from making bets on stock declines in an attempt to stem some of the worst stock-market slides in years, according to people briefed on the proposal.
The SEC was convening a late-night commission meeting to consider several items, some of which could be announced as early as today, a person familiar with the matter said. It's unclear whether the halt will be limited to a certain number of financial stocks or how long it would last.
again -- beyond observing the complete, abject, mindless and total panic that has clearly hit the political arena of which both the SEC and FSA are entirely a part -- this is as poorly conceived as regulatory ideas get. whoever is putting this in place knows little or nothing about how the markets have come to function in the era of derivatives. this has unintended consequences written all over it.
moreover, i'm compelled to agree with mish's friend CS:
The basic premise of a free economy is one governed by laws and not men, where property rights are respected, where individuals are free to make contracts with each other, and where honesty and transparency exist in the marketplace. It's questionable whether any of these currently exist in the economy of the United States.
and further agree with tim knight:
[F]rankly, it only convinces me more that this market is doomed. Because if they have to go to this extreme - - making shorting stocks illegal - - this market is going to eventually get pounded. They can make shorting illegal. But not selling.