Short Selling Banned From Midnight Uk

[roamer]

FSA has banned short selling from midnight tonight. Whether it will work or not is another thing, more than one way to skin a cat.

Link

[lannarebirth]

FSA has banned short selling from midnight tonight. Whether it will work or not is another thing, more than one way to skin a cat.

Link

If by "will it work?" you mean "provide an opportunity to unload some stuff a little bit higher and buy puts" then yes it probably will.

[cocopops]

So now Mr. Darling is in favour of market stability. Seems to me that banning Mr. Darling from speaking in public would have been a more effective change.

[cclub75]

Same old BS... Like in Zimbabwe where the gvt declared inflation "illegal".

We are waiting for a clown in the US, or somewhere else, who will propose to ban any decrease in stock market. Only one way : up. That would do the trick, right ?

All gvt intervention is poised to fail. It's a basic rule, but from time to time, some lunatics believe that they are smarter and that they can succeed.

We'll see.

By the way, breaking news : Russia is "ready" to buy... for 14 billions euros... of shares on the stock market ! Good old commies, since the Soviets they feel alone. Their habits are coming back.

Well at least they will pay for those shares. Their grand fathers weren't so polite.

Edited September 18, 2008 by cclub75

[lannarebirth]

This blame game is short on logic

By Douglas Kass

After acquiring General Re in 1998, Warren Buffett, the veteran investor, learnt the hard way that “derivatives are like hel_l, easy to enter but almost impossible to exit”.

Four years later, Mr Buffett, chairman of Berkshire Hathaway, argued that highly complex financial instruments and derivatives were time bombs and that these “financial weapons of mass destruction” might harm the econ­omic system. His caution was prescient – like that of many others who have identified company frauds or diagnosed previous credit cycles gone wild. Yet most of these gloomy messengers have been ignored. Since Mr Buffett’s warning, financial markets have imploded and policymakers have failed to address the abuses that created the crisis, from the excess leverage of banks to ratings agency failures.

Instead, public policy has become focused on a blame game aimed at res­tricting the short-selling of securities – especially of a financial kind. In July, Christopher Cox, chairman of the US Securities and Exchange Commission, announced a plan to curb improper (naked) short-selling. In doing so he has (de facto) attempted to limit the activity of short-sellers. Mr Cox seems to be implicitly blaming the shorts for the unprecedented fall of bank, ­government-sponsored agency and brokerage stocks over the past year – even though short-sellers were the very group that warned of the dangerous credit cycle and its consequences.

Forum

Are shortsellers being blamed unfairly? Have your say at www.ft.com/shortforum

Short-selling runs deep in financial history. Perhaps the first case dates to 1609 when the Dutch trader, Isaac Le Maire, targeted the shares of the shipping company Vereenigde Oostindische Compagnie (the Dutch East India Company). VOC was the first multinational corporation in history and had broad powers. Nonetheless, Le Maire, concerned about threats of attack by English ships, sold VOC’s shares short. After learning about Le Maire’s tactics, the stock exchange governing VOC’s trading banned short-selling (although the ban was later revoked).

In the early 1630s, the Dutch economy fell into a depression following a speculative peak in the trading of tulips. Again, short-selling raised the ire of regulators, many of whom saw it as magnifying the effect on the Dutch economic downturn. As a result, England banned short-selling outright.

Almost 420 years later – in the late 1920s – short-sellers warned of the consequences of speculation. But in the aftermath of the Wall Street crash of 1929, many blamed them and the uptick rule – which banned short-selling on downticks – was instituted (and stayed in effect until 2007). More regulation governing short-selling came into force in 1940, with a ban on mutual funds from short-selling (though that law was lifted in 1997). In early 2005, the SEC again sought to restrict the practice.

Yet short-sellers have served as financial watchdogs, as many of their warnings have been spot on. The delusional dotcom boom in the late 1990s brought Cassandra-like utterings from the short-selling cabal that proved insightful but were largely ignored. After the subsequent 75 per cent collapse of the Nasdaq, a bull market in corporate fraud emerged and short-sellers such as David Rocker, founder of Rocker Partners, highlighted accounting problems at companies such as Sunbeam, Tyco and Lernout & Hauspie. Kynikos’ Jim Chanos played a role in uncovering the largest fraud in history when his contrary-minded analysis warned of Enron’s accounting shenanigans – which were emulated (but ignored by investors) in the banks’ recent dalliance with structured investment vehicles.

By the middle of the decade the property cycle was in full bloom and David Tice of the Prudent Bear Fund warned of the dire ramifications of a downward spiral in home prices on the levered balanced sheets of Fannie Mae and Freddie Mac. Soon thereafter, Nouriel Roubini, the economist, voiced particularly pessimistic forecasts about the housing market’s impact on credit.

Drawing a line between economic and market progress as against fantasy is a role taken by the few. Short-sellers provide an anchor of objectivity in an investment world populated by those more interested in rewards than in un­covering systemic risks. This week, Mr Cox said the SEC would announce new regulations to restrict short-selling. Instead of more regulation, the chairman and investors should begin listening to what short-sellers have to say about our economy and credit markets

http://www.ft.com/cms/s/0/95ccac78-6fb1-11...00779fd18c.html

[VegasVic]

FSA has banned short selling from midnight tonight. Whether it will work or not is another thing, more than one way to skin a cat.

Link

The word is out that German markets will be taking the same action starting Monday also! As I have stated in another post on tv this is a knee jerk reaction, and while I do know first hand of the excesses and lack of oversight of the hedge fund industry, it is the lack of regulation (both in America and Europe) of these hedge funds and derivative markets that has brought us to this move of desperation. Lawmakers on both continents were in the back pockets of these powerful instiuitions and so no effective oversight regulations were really ever passed. While I am not usually a proponent of governmental regulation I do think that while the pendulum may swing the other way a bit too far for a while, that in the end the hedge fund industry on both continents will wind up with the transparancy that was needed 15 years ago. It is sad that it takes this sort of disaster for common sense legislation to take place, I guess that it just goes to show that "greed for the lack of a beter word" is NOT a "good thing" as Gordon Gecko put forth in the movie Wall Street, rather greed is indeed one of the seven deadly sins and may very well lead someday to the downfall of Capitalisim.

[VegasVic]

Same old BS... Like in Zimbabwe where the gvt declared inflation "illegal".

We are waiting for a clown in the US, or somewhere else, who will propose to ban any decrease in stock market. Only one way : up. That would do the trick, right ?

All gvt intervention is poised to fail. It's a basic rule, but from time to time, some lunatics believe that they are smarter and that they can succeed.

We'll see.

By the way, breaking news : Russia is "ready" to buy... for 14 billions euros... of shares on the stock market ! Good old commies, since the Soviets they feel alone. Their habits are coming back.

Well at least they will pay for those shares. Their grand fathers weren't so polite.

Comparing Zimbabwe to the U.S. and European markets I for one am glad to see cclub, he puts such an enlightening perspective on the situation at hand