This page has been archived and commenting is disabled.

NYT Reports Eurowide Short Selling Ban Imminent

Tyler Durden's picture




 

Proving once again the nobody ever learns from the past, and is guaranteed to repeat the worst mistakes thereof, the NYT has reported what Zero Hedge noted less than a day ago when we said that a "Eurowide short selling ban now appears imminent" with a report that "Europe Considers Ban on Short Selling." What this means is that transatlantic panic is really about to spike, and the next imminent step is a total collapse of European capital markets. European regulators should be bound and quartered for even considering this stupidity which will destroy price discovery and lead everyone to dump their holdings ahead of a resumption of the Lehman bankruptcy PTSD flashbacks. Also making short covering impossible will remove the only natural downside market buffer. Oh well, if they want to blow themselves up, so be it. 

From the NYT:

A European market regulator is considering recommending a temporary ban on negative bets against stocks across the continent, in an effort to stop the tailspin in the markets, according to two people with knowledge of government discussions. 

 

The European Securities and Markets Authority, a body that coordinates the European Union’s market policies, has been requesting information from member states about such bets against stocks, known as short-sales. 

 

“We are discussing with national authorities and together we will decide whether we need coordinated action,” said Victoria Powell, a spokesperson for the E.S.M.A. She declined to comment on the timing of any decision or its possible scope.

 

The two people knowledgeable about the discussions said the authority might propose a ban on betting against all stocks or just financial stocks. It also may propose a ban on a certain type of short selling in which the party making the negative bet does not borrow the share it is shorting first. The bans would likely be temporary, just to calm the markets.

 

Such a policy would add to the list of parallels commentators are making between the current market panic and the financial crisis of 2008.

Sure enough keep an eye on BAC (not to mention Fairholme) should this be enacted: it will be mean the start of the tumbling dominoes for the global financial system.

And we sure hope readers have been hoarding gold at cheaper prices courtsy of the CME's margin hike gift from yesterday.

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Thu, 08/11/2011 - 08:24 | 1550230 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

Going long precious metals also to be banned.

We're run by a criminal cabal of genocidal scum, is anyone still doubting that?

Thu, 08/11/2011 - 08:26 | 1550237 LoneStarHog
LoneStarHog's picture

Black Market prices for PHYSICAL would literally go NUCLEAR!

Thu, 08/11/2011 - 08:29 | 1550250 achmachat
achmachat's picture

black markets accept ETFs, don't they?
I shit you not; that guy on cnbc was saying how you should put 20% of your portfolio into paper gold because it's so conveniant to trade.

Thu, 08/11/2011 - 08:33 | 1550261 Fish Gone Bad
Fish Gone Bad's picture

It looks like it is once again, time to slide down the razorblade.

Thu, 08/11/2011 - 08:50 | 1550275 SheepDog-One
SheepDog-One's picture

CNBC told to pimp the paper gold again huh?

These people really are clueless I guess its not just an act, theyve been pampered and bullshitted so much on CNBC they actually believe the lies they spew. We've gone full retard.

Thu, 08/11/2011 - 09:34 | 1550514 mess nonster
mess nonster's picture

Well someone's talking about untraceable gold.

https://www.kitcomm.com/showthread.php?t=63515

Thu, 08/11/2011 - 10:41 | 1550808 Manthong
Manthong's picture

Not to mention the "untraceable guns and ammo".

: )

Thu, 08/11/2011 - 08:29 | 1550247 Popo
Popo's picture

Yes.. they are criminals.

What makes them think they won't impose a simple 30% tax on metals transactions?

Easiest thing in the world to do.  Diversify my friend.  Gold and silver yes.  But if you want to beat the criminals you have to think more creatively.

Thu, 08/11/2011 - 08:50 | 1550286 SheepDog-One
SheepDog-One's picture

How about bypassing all the taxes and Uber COngress just declares overnite you will turn in your physical gold in 48 hours, or be faced with immediate 10 years in prison charge. People may laugh, but how many people would REALLY ignore that and face being a felon? I bet at least 50% of PM holders would go turn it over.

Thu, 08/11/2011 - 08:57 | 1550334 lincolnsteffens
lincolnsteffens's picture

50% ain't 100 percent. Anyone who is fool enough to turn over about the only guaranteed store of wealth aside from fertile soil to a criminal organization without a fight deserves FRNs.

Thu, 08/11/2011 - 09:18 | 1550411 Beau Tox
Beau Tox's picture

If they ask for our gold,

Just give them our lead!

Thu, 08/11/2011 - 09:00 | 1550339 Popo
Popo's picture

Honestly,  I don't think confiscation is politically feasible in this day and age,  but of course it's always possible.  (I wouldn't put anything past our government)

But taxing transactions and imports/exports of precious metals accomplishes essentially the same thing with a simple stroke of the pen.  It's much cleaner,  faster and politically palatable.

I think the odds of a gold tax are well over 90%.  Silver on the other hand has a good chance of being left alone entirely because it's an industrial metal as well as a PM.    It's difficult to tax it without harming industry.   Copper, even more so.

 

 

Thu, 08/11/2011 - 10:10 | 1550661 masterinchancery
masterinchancery's picture

And you think the Regime cares about harming the economy?

Thu, 08/11/2011 - 09:12 | 1550378 Vincent Vega
Vincent Vega's picture

Sheep, I always enjoy you commentary and insight. You may be correct about 50% of the sheeple turning in their PM's under such duress. It makes me wonder if the same would be contempleated regarding firearms. If either were to occur, an otherwise honest man such as myself, would become a felon.

Thu, 08/11/2011 - 10:46 | 1550828 Manthong
Manthong's picture

The question then becomes "What is the felon/insurgent ratio?"

Thu, 08/11/2011 - 08:35 | 1550271 GoldBricker
GoldBricker's picture

I don't think anyone but the paid trolls will disagree with you. Nor do I disagree about a ban on PMs

Recall that, when short sales of selected stocks were banned in the US, the Wall St. banks' prop-trading desks were exempted as 'market makers'. Whenever a trade looks like a sure money-maker, ordinary citizens are forbidden to make it. It's as if Benny was dropping benjamins from his chopper, and only banksters were permitted to pick them up.

I suppose we should be grateful to TPTB for signaling that the run is now official.

Thu, 08/11/2011 - 09:13 | 1550380 chubbar
chubbar's picture

Even during the confiscation of 33 the gov't allowed collectors to own gold coins with numismatic value (hint). I find the idea that a bunch of congressmen can tell me what I can and can't own abhorrent and basically unconstitutional given the fact that our constitutional money is actually gold/silver coins, which has never been amended.

Guess I'm going to be a felon. Maybe if several million would stand up to these thugs they would see the futility of outlawing citizens from protecting their purchasing power via pms.

Thu, 08/11/2011 - 09:40 | 1550547 RockyRacoon
RockyRacoon's picture

There are all sorts of laws about what you can and can't own -- what's one more?   Couch-taters won't care because they don't own any no how.   The bubble is in gold talk, not gold ownership.

Thu, 08/11/2011 - 10:48 | 1550838 Manthong
Manthong's picture

Hmm...  Is gold talk hate speech?

Thu, 08/11/2011 - 10:30 | 1550750 mickeyman
mickeyman's picture

We only want honest price-discovery if the prices so discovered are politically convenient.

Thu, 08/11/2011 - 08:24 | 1550231 Peter K
Peter K's picture

NY Times? Isn't that the rag responsible for that nutcase shooting all those people in Norway?

Thu, 08/11/2011 - 08:25 | 1550234 bigdumbnugly
bigdumbnugly's picture

whatever gets them through the next 5 minutes...

Thu, 08/11/2011 - 08:32 | 1550254 Popo
Popo's picture

Banning shorting just drives down liquidity.   It's an equally deadly mix for equity values.

Thu, 08/11/2011 - 08:38 | 1550284 StychoKiller
StychoKiller's picture

In related news, vultures are prohibited from cleaning up dead bodies (which should make for more "healthy" environments!)

Thu, 08/11/2011 - 09:07 | 1550358 LawsofPhysics
LawsofPhysics's picture

"safer environment" - er NO, long human pathogens and flesh eating bacteria!

Thu, 08/11/2011 - 08:41 | 1550296 SheepDog-One
SheepDog-One's picture

Yea lets have a market with so many unfair rules and such an iron fist environment that you'd have to be INSANE to ever buy in again?

Not even considering the present pathetic state of low volume markets, people already dont trust it at all. So hey I know, lets rule you can ONLY buy! Yea, only a PHD could put us in the present totaly broken situation we're in.

Thu, 08/11/2011 - 09:46 | 1550571 mess nonster
mess nonster's picture

When everyone but the TBTF's are excluded from the market, then it becomes relevant only to them. Everyone else finds something else to do with their time and/or resources. It seems to me that the market can be tweaked, and that's fine as long as the tweaking increases efficiency but if regulated too much, the market becomes cumbersome. Look at illegal drugs. The market in these commodities is underground, because gov't makes them illegal. Extreme example, but the market is still there, just not officially. PM's are a way of the real market moving out of the conventional "market" paradigm and into a grey/black zone, where returns can be realized without massive interferance from nitwits and bobbleheads whose job is to protect criminal syndicates with official concessions.

Thu, 08/11/2011 - 10:09 | 1550657 A.W.E.S.O.M.-O 4000
A.W.E.S.O.M.-O 4000's picture

Cause nothin says "Capitalism" like banning short selling.

Thu, 08/11/2011 - 08:36 | 1550276 GoldBricker
GoldBricker's picture

An HFT can place a lot of trades in 5 minutes.

Thu, 08/11/2011 - 08:26 | 1550236 caerus
caerus's picture

evil speculators

Thu, 08/11/2011 - 08:26 | 1550238 gratefultraveller
gratefultraveller's picture

This morning in Europe CMC Markets (an online CFD trading platform) had already made shorting of french banks impossible

Thu, 08/11/2011 - 08:27 | 1550241 Irish66
Irish66's picture

Has a Thursday ever been a market collapse or do I have 

wait till Friday or Monday?

Thu, 08/11/2011 - 08:31 | 1550253 jcrows
jcrows's picture

Wondering about that as well

 

Thu, 08/11/2011 - 08:38 | 1550280 GoldBricker
GoldBricker's picture

I'm calling for a Friday or Monday in October, just for historical consistency. I figure that TPTB can hold it together for another 50 days or so. And if my call comes in a winner, I'll declare myself a genius and start my own subscription blog.

Thu, 08/11/2011 - 08:38 | 1550283 Muddy1
Muddy1's picture

Just a couple come to mind:

Thu, 08/11/2011 - 10:00 | 1550629 Abitdodgie
Abitdodgie's picture

I think the start date of this crash is more inportant, on Obuumers birthday, the day they decided to start the death of America 

Thu, 08/11/2011 - 09:34 | 1550513 Jason_1sandal
Jason_1sandal's picture

They forgot one.... The crash of 1920. President Warren Harding kept the governments hands off the markets and economy even though Herbert Hoover begged him to do "something." It has been seen as bad as or worse than the 1929 crash, only without government intervention it only lasted approximately 18 months

Thu, 08/11/2011 - 08:33 | 1550244 Mercury
Mercury's picture

Would that enable any arb straegies in securities listed both on exchanges where SS is prohibited and ones where they aren't?...or does that just F-up price discovery?

Thu, 08/11/2011 - 08:29 | 1550248 Captain Benny
Captain Benny's picture

Silver is about to play catchup with gold.  When all hell breaks loose and the masses start their bank run, you can bet that silver will be flying off the shelves far more than 5:1 on a silver:gold dollar basis.  I love holidays of all kinds, Christian Christmas, Muslim Eid Al-Fitr, Jews Yom Kipper, and Keynesian bank holidays!  They're all great.

Thu, 08/11/2011 - 08:29 | 1550249 murdomcsponge
murdomcsponge's picture

In the immortal words of William Topaz McGonagall, the greatest poet who ever lived, "We're all doomed!"

Thu, 08/11/2011 - 08:31 | 1550251 misterc
misterc's picture

As far as I know, CFD-platform providers are bucket shops. Your win is their loss and vice versa. So when they are convinced some stocks will go down, they will make it impossible to short them because the platform provider would lose money.

Thu, 08/11/2011 - 08:32 | 1550256 Josh Randall
Josh Randall's picture

Better odds are to be had in Vegas than the Euro market now

Thu, 08/11/2011 - 08:32 | 1550259 sudzee
sudzee's picture

Free markets bitchez?

Thu, 08/11/2011 - 08:32 | 1550260 Catullus
Catullus's picture

Long anything with negative beta. Holy shit this is a mistake.

Thu, 08/11/2011 - 08:33 | 1550262 Coke and Hookers
Coke and Hookers's picture

I'm familiar with the arguments behind short selling and price discovery but I want to ask a really stupid question anyway (good thing the junk button doesn't work:-)

Are there any real evidence that short selling really 'improves' price discovery? Does increased 'dynamic' in pricing equal 'improved' price discovery? Are sectors where short selling is not practiced systematically priced wrong?

And finally: If an EU ban on short selling will speed up the crash by making investors dump their holdings, wouldn't that be better price discovery than before since the entire Eurozone is a turd waiting to be flushed? Wouldn't short selling as an incentive to hold falsify the markets 'upward'?

I'm going to smoke a good cigar while I await your answers and possible hate mail.

 

Thu, 08/11/2011 - 08:39 | 1550287 IrishSamurai
IrishSamurai's picture

There's this whole other world outside of Zerohedge that most people refer to as "The Internet" ... you might find your answer out there as you're obviously too ignorant of economics to understand anything discussed here at Zerohedge:

http://tinyurl.com/3elucwt


Thu, 08/11/2011 - 08:47 | 1550316 Coke and Hookers
Coke and Hookers's picture

Dude, I said in the mail that I was familiar with price discovery and short selling and historical examples of short selling affecting the markets. I don't need to google that. I asked simple questions about 'real' evidence, not economic arguments. In the post above, Tyler says that short selling ban may cause a crash because traders will dump their holdings and exit the markets. I asked if there was something wrong with that and if (in this case) short selling was holding the market artificially high. I can't see why these questions are not legit.

If you have a need to fling poo when someone commits anti-short selling dogma thoughtcrime, it's up to you. I don't care.

Thu, 08/11/2011 - 09:02 | 1550348 IrishSamurai
IrishSamurai's picture

In the post above, Tyler says that short selling ban may cause a crash because traders will dump their holdings and exit the markets. I asked if there was something wrong with that and if (in this case) short selling was holding the market artificially high. I can't see why these questions are not legit.

Your questions above don't read that way ... it sounds like you do not understand how short selling creates a more efficient market ...

Yes, short selling is helping to hold the market artificially high ... and the idiots in charge do not understand this.

Thu, 08/11/2011 - 09:16 | 1550403 slewie the pi-rat
slewie the pi-rat's picture

tyler writes:  "Also making short covering impossible will remove the only natural downside market buffer."

perhaps you could translate for the rest of us morons, ok? 

t.y. in advance.

Thu, 08/11/2011 - 09:46 | 1550567 Coke and Hookers
Coke and Hookers's picture

I wasn't defending the short ban. From the EU point of view the ban is probably a major mistake. I was just talking about shorts in general and the possibility that short sales were systematically falsifying the market. I also wanted to see some discussions on the topic because the benefits of shorting as price discovery mechanism are just taken for granted in a dogmatic fashion. There's a lot of dogma all over the place, self-evident truths that are accepted by the majority because of hypothetical arguments in econ books rather than facts (although sometimes there are no clear facts). We all know how immensely successful (/sarc) modern economics has been and how effective the market has been in pricing the various bubbles in the last decades (/sarc). I don't see anything wrong with questioning dogma.

The manipulation of markets through collusion between the fed/banks/trading agencies etc is the biggest problem of course. Price discovery is generally 'impure' because of that. I think it's only reasonable to ask whether shorting does really increase the 'purity' of price discovery. If these questions make me look stupid, that's ok with me.

 

Thu, 08/11/2011 - 10:11 | 1550664 TruthInSunshine
TruthInSunshine's picture
by IrishSamurai
on Thu, 08/11/2011 - 09:02
#1550348
 

Yes, short selling is helping to hold the market artificially high ... and the idiots in charge do not understand this. 

 

Really now.

Short selling is helping to hold the market high?

I can only hazard a guess that you somehow intend to imply that short covering rallies temporarily delay further moves down.

Is that what you meant?

And if it is (it just has to, it just has to), then are you actually claiming that banning short selling is going to make for a more efficient market?

Thu, 08/11/2011 - 10:03 | 1550636 Abitdodgie
Abitdodgie's picture

I think that is a good question !

Thu, 08/11/2011 - 09:54 | 1550595 mess nonster
mess nonster's picture

Hey C&H, here's a JUNK button to push, for this rude fucker. I though the question was elegant and original- right on, 'cause TPTB can try to fuck with the market, but it has a life of it's own- this is the essence of ZH raison d'etre. By trying to obfuscate price discovery, they propel it forward. Karmic poodles to bite their asses!

Thu, 08/11/2011 - 08:45 | 1550309 StychoKiller
StychoKiller's picture

In case someone does not know the pros in defense of short-selling:

Richard Sauer is the author of "Selling America Short: The SEC and Market Contrarians in the Age of Absurdity." Sauer was an administrator with the Division of Enforcement of the Securities and Exchange Commission, a partner in an international law firm and an analyst with a Northern California hedge fund. He holds a doctorate in law from Harvard Law School.

Pity the poor short-seller. Seriously. That much-maligned
creature gets no love at the best of times, and these days are more like the worst.

This, despite the irreplaceable benefits he brings to the financial markets. Short-selling in the conventional sense involves borrowing stock, selling it and, at a later date, replacing the borrowed shares through market purchases. If, in the interim, the shares have declined in value, the short-seller prospers. If not, he doesn't.

The term "shorting" is also loosely applied to any investment that depends for its profitability on someone else's pain. Thus, any bet, however constructed, that an asset will decline in value may be referred to as shorting that asset. This would include, for example, purchasing credit default swaps on corporate bonds, which will pay off in the event of default. "Shorting" in the broader sense has recently come in for a strong dose of popular opprobrium.

Earlier this month, as the world knows, the SEC sued Goldman Sachs for allegedly hiding material information about a financial instrument it had constructed for the specific purpose of allowing one of its clients, Paulson & Co., to bet against the performance of certain mortgage-backed bonds. Paulson used this device as a means (broadly speaking) to short the housing market, which it correctly viewed as due for a fall.

Now Goldman has made a further bid for unpopularity in connection with its shorting activities. In e-mails recently disclosed to the public, its traders celebrate their winning bets against a declining housing market and, more specifically, against the rickety edifice of asset-backed and synthetic derivatives Goldman had, just as gleefully, helped construct while the constructing was good.

One might question the social utility of such transactions. And, indeed, it is hard to see any except in their Darwinian effect of helping less astute economic actors toward their career extinction.

Goldman may contend that its proprietary shorting of the housing market served as a hedge against exposure to that market elsewhere in its portfolio. 

Often, however, such transactions represent nothing more than zero-sum wagers among large financial entities. In most cases, they are no one else's concern, but if the losing players badly miscalculate their loss exposure, as some have done, they may compromise their financial soundness and cause problems well beyond their own doors.

Compare this with conventional short-selling, an activity beloved by nearly all economists with an opinion on the subject. The main virtues of short-selling are these. It adds liquidity to the market by increasing transaction volume.  It provides a hedging mechanism necessary for many other types of investment activities, including some conducive to capital formation. Most important, it injects into the market a healthy skepticism to counter the blind enthusiasm, ignorance and occasional fraud that otherwise may run unchecked.

The great majority of investors stay exclusively on the long side. They have limited incentive to seek out (and less to publicize) negative information about public companies. Professional shorts, however, have both the motivation and the skill to look beyond the happy talk of company management and sell-side analysts.

These bear investors have provided early warnings of such corporate blowups as Enron and deflated many a pump-and-dump scheme. More generally, they help true up the value of publicly traded securities by making certain their negatives do not go unseen.

Despite all this, however, short-sellers are often targeted for blame when the market disappoints. Bear raids and "short and distort" schemes are commonly alleged, however rarely proved, by troubled companies eager to displace blame for their failures.

They have sometimes won the ear of regulators. During the 2008 market meltdown, as one of many examples, the SEC imposed ill-considered rules that imposed severe losses on short-sellers while doing little to stabilize the market.

In his 2008 presidential campaign, Sen. John McCain charged that the stock market had been turned into a giant casino by short-sellers -- apparently unable to distinguish the conventional practice from the novel and complex forms of straight-out gambling on market declines that have flourished in recent years.

This is a common mistake. In many years in the SEC's Division of Enforcement, I learned to value the contribution made by short-sellers toward keeping our markets honest. It would be unfortunate should this dwindling subculture be further diminished through the confusion of their role with that of others who provide none of the same benefits.

The opinions expressed in this commentary are solely those of Richard Sauer.

Thu, 08/11/2011 - 08:50 | 1550320 Catullus
Catullus's picture

You don't need an empirical approach to know this that banning short selling is silly. So the legal way of short selling is to borrow the shares and sell them. You eventually have to buy them back at some price whether higher or lower. I know this is really elementary, but a bid must come back into the market at some point. That could be 90% lower, but that's determined to be FV. When you ban this practice, there's no inherent bid in the market. Let the bottom fall out, the imaginary 1s-0s just cease to exist.

I'd imagine it'll just cause short selling somewhere else if Europe bans it. Here's an idea: the north American markets. Doubling down on a massive Fed liquidity flood.

Thu, 08/11/2011 - 09:01 | 1550345 Coke and Hookers
Coke and Hookers's picture

I know that and I disagree that we don't need empirical data. The fact is that nobody really knows for sure how short selling affect markets. There's a lot of opinion, examples and speculation but that's all. Does it really help price discovery og does it falsify prices by increasing liquidity and/or by allowing price suppression by financially strong entities?

Two examples:

1) If there's a short selling ban, the purpose will be to protect markets from 'speculators' to keep the price up. However, (as Tyler stated) there's a possibility that traders will exit the market in case of a ban causing it to crash. So, which one is right? If we really understood what short selling really does, we would be able to answer that.

2) I have seen some people here bitching over the silver market being suppressed by (possible) massive short positions by banks. They say the market is being kept artificially low by short selling - i.e. it's impeding silver price discovery. Then the next minute they bitch about the EU short selling ban becauses it will impede price discovery there. Makes sense ehh?

The fact is that the benefits of short selling as a price discovery mechanism are not clear at all. What it clear though is that believing in it as a price discovery aid has become a dogma.

Thu, 08/11/2011 - 09:07 | 1550361 IrishSamurai
IrishSamurai's picture

I have seen some people here bitching over the silver market being suppressed by (possible) massive short positions by banks. They say the market is being kept artificially low by short selling - i.e. it's impeding silver price discovery. Then the next minute they bitch about the EU short selling ban becauses it will impede price discovery there. Makes sense ehh?

If people are bitching about that ... they're ignorant of market dynamics.

Most bitching I see on the silver market is margin requirements which does enable the banks to suppress price by pricing out potential buyers who would like to acquire the asset on leverage.  That is how the banks can artificially suppress the price in markets ... by stipulating requirements that do not allow all market participants into the market.

Thu, 08/11/2011 - 09:18 | 1550408 Catullus
Catullus's picture

Makes sense what you're saying. Let me recap it: banning short selling has not proven to increase or decrease liquidity to any significant degree. I'd say out of hand that's incorrect because you are necessarily banning an activity that would create a bid in the market after a precipitous fall or a modest gain. To say what those variance bans of market movement to either side should be or would be at any given moment depends on the individual trader and based on every moment in time. If there's a shit my pants panic going on, a trader might let their short ride awhile. Or the Fed puts out a rumor via The Goldman. Point is: you can't measure the point at which liquidity would re-emerge as relates to the market movement. You're asking for an unprovable.

On an apriori level, you know that banning short selling, sets up the situation where there's inherent bid in the market. It is, all else being equal, less liquid that it would have been had you not banned short selling.

Thu, 08/11/2011 - 09:25 | 1550452 Ricky Bobby
Ricky Bobby's picture

We are not bitching about shorting silver within fair market rules. We are bitching about market manipulation, naked shorting, collusion between big banks the fed and treasury. Coordinated rule changes by exchanges in conjunction with insider information. Metals leasing 10x, Government dirty tricks a whole myriad of central planning and intervention. A fair market that allows short selling with in the rules no fucking problem.

Thu, 08/11/2011 - 08:52 | 1550323 Withdrawn Sanction
Withdrawn Sanction's picture

What kind of evidence would you accept?

As a general rule, it seems to me, that anytime you impede potential traders from acting on their beliefs, you impede price discovery.  That's not to say short sellers are always right (they often are not), but rather that price discovery is process of competing world views.  "Correct" prices, in other words, do not exist a priori; they are found through a process of trial and error.

This prospective ban, while probably not decisive in itself, is just one more grain of sand on the heap.  The ECB rate raise a few weeks ago, the withdrawal of Asian support, the reductions in deposits, and so on are all signs of evaporating liquidity.  The short-selling ban is just one more instance of this.  Which instance of reduced liquidity will be decisive and cause the heap to collapse?  Who knows but this ban is not likely to be helpful in that regard.

Thu, 08/11/2011 - 09:08 | 1550364 Coke and Hookers
Coke and Hookers's picture

A good start would be to point out a sector that's systematically priced wrong because short selling isn't used there. I would also like to see an example of a sector where short selling is used that does have pricing that's anywhere close to reality.

Thu, 08/11/2011 - 11:21 | 1550972 taraxias
taraxias's picture

It sounds like you are asking to "see" gravity as oppossed to "feel" gravity. Good luck with that.

What do you think, allowing buying with leverage while banning short selling makes for good price discovery?

Thu, 08/11/2011 - 08:53 | 1550325 Manthong
Manthong's picture

I will gladly sell a put to you today for a security Tuesday.

Thu, 08/11/2011 - 08:34 | 1550264 --Freedom--
--Freedom--'s picture

Anyone know whether this potential ban would affect bear ETFs in the US? I assume it wouldn't, but would love to hear opinions. Can they ban these, too?

Thu, 08/11/2011 - 09:40 | 1550545 New_Meat
New_Meat's picture

did with the financials in Sept-Oct '08

Thu, 08/11/2011 - 08:35 | 1550268 sudzee
sudzee's picture

QE3 will be a hundinger. Add another zero to QE1. Should be another interesting weekend.

Thu, 08/11/2011 - 08:45 | 1550310 SheepDog-One
SheepDog-One's picture

Yes and the only thing QE3 will do now is completely collapse the dollar, its not 2008 anymore and no one believes in any of this ridiculous print and pump BS now, so good luck to em keeping their necks out of nooses.

Thu, 08/11/2011 - 08:35 | 1550272 alien-IQ
alien-IQ's picture

I love the smell of desperate banksters in the morning...it smells like...victory.

Thu, 08/11/2011 - 08:46 | 1550312 dark pools of soros
dark pools of soros's picture

they aren't desperate.  they are in full control of the markets.  all their gangs are ready for the takedown and will lock in their profits on the downside just as they did on the upswing

Thu, 08/11/2011 - 08:50 | 1550321 Azannoth
Azannoth's picture

Not so fast, the politicians and aparatnics are desperate the (high level)bankers will come out on top in the end over every1 elses bodies,

don't threat for the Roschilds and Rockefellers they always win no matter what, this is just a storm in a tea cup for them

Thu, 08/11/2011 - 08:35 | 1550273 BlackholeDivestment
BlackholeDivestment's picture

...wow, that was quick off the ticker Tyler. Snorkin was CNBCing it and boom, yer right there. http://www.youtube.com/watch?v=qYKlYA77ZI4

Thu, 08/11/2011 - 08:35 | 1550274 Muddy1
Muddy1's picture

 Just a couple come to mind:

Thu, 08/11/2011 - 08:36 | 1550277 LawsofPhysics
LawsofPhysics's picture

It isn't short selling that is driving markets down.  It is people waking up and turning all paper into physical assets of all sorts.

Thu, 08/11/2011 - 08:38 | 1550281 Edwardo
Edwardo's picture

Yes, a Thursday has seen a market collapse. See your Great Crash of '29 history.

Thu, 08/11/2011 - 08:38 | 1550282 Drag Racer
Drag Racer's picture

Turkey Joins Greece, South Korea in Curbing Short Sales After Global Rout

http://www.bloomberg.com/news/2011-08-10/turkey-scrutinizes-short-sales-...

Thu, 08/11/2011 - 08:39 | 1550288 ZeroPoint
ZeroPoint's picture

Those evil socialists!!! They need a taste of the back of the invisible hand of the free market!

Thu, 08/11/2011 - 08:40 | 1550290 Grifter
Grifter's picture

So, in order to short BAC, someone has to loan you the shares to go out & sell...what organization in their right mind would do that right now?  I'd have to believe everyone & their mistress would be shorting BAC right now.  (Grifter is not a trader, in case you couldn't tell)

Thu, 08/11/2011 - 09:01 | 1550342 Withdrawn Sanction
Withdrawn Sanction's picture

what organization in their right mind would do that right now?

The kind that makes 5 to 8% margin interest on short sales. the kind that does not own the stock but holds it in "trust" (i.e., in a street name).

Thu, 08/11/2011 - 09:08 | 1550363 Grifter
Grifter's picture

Many thanks, sir/madam

Thu, 08/11/2011 - 08:40 | 1550292 dark pools of soros
dark pools of soros's picture

what it really means is that the TPTB have their shorts in place and do not want anyone else to snowball on their game as they want full control of when to bring the market back up once they determine when to reverse and go long

governments are like the guy running the roulette wheel while the banksters own the casinos

Thu, 08/11/2011 - 08:43 | 1550300 IrishSamurai
IrishSamurai's picture

+1776 ...

Anyone trying to "trade" in this Macau casino is getting what they deserve ...

Thu, 08/11/2011 - 08:46 | 1550311 jkruffin
jkruffin's picture

LOL   Some moron on Yazoo boards said Bloomberg radio this morning said Moynihan says BAC is well capitalized....LOL 

Let's see the response to that post:

 

Let's see In 2008:

Ken Lewis said the same thing, then needed $50 Billion bailout. Merrill Lynch CEO said same thing, went bankrupt within a month,
Bear Sterns CEO said same thing, collapsed days later,
Lehman Brothers CEO said same thing, collapse in 3 days...
Citibank CEO said same thing, need $100+ billion bailouts to survive

Uh, you see where this is going now? They LIE!!! They have to LIE!!!! They have no choice but to LIE!!!!! Get out while you can....

Thu, 08/11/2011 - 08:46 | 1550314 gwar5
gwar5's picture

A few more bits of Financial repression, in all it's glory.

They're struggling to make it to the weekend.

 

Thu, 08/11/2011 - 08:49 | 1550317 SheepDog-One
SheepDog-One's picture

I guess you can put as many ridiculous rules into the market as you want, but it wont make people ever trust it anymore. Confidence has been lost, and anyone with a brain is getting out and buying assets instead of totaly fake and manipulated paper. You cant enforce confidence by rules and law.

Thu, 08/11/2011 - 08:57 | 1550335 Sudden Debt
Sudden Debt's picture

short selling or naked short selling?

Thu, 08/11/2011 - 10:15 | 1550680 Reptil
Reptil's picture

+1 seems this is about naked short selling. (??)

Thu, 08/11/2011 - 08:57 | 1550336 fledermaus
fledermaus's picture

Ever get the feeling TPTB are reading ZH?  TD and ZH have been right in predicting the stoopid things TPTB will do.  

Since readers and contributors are that SPOT ON, obviously having a command and understanding of all that is going on, Personally, I'd like to see some ideas on what could realistically be done to fix things.

I know the 'gold standard' but that isn't likely to happen BEFORE meltdown.  Do any of the heavy hitters on this site want to weigh in in addition to the reasons why somethign is 'fuct', weigh in on an alternate positive fix?

Although ZH is like a crystal ball for the future.  I'm dissapointed in my fellow Humans if we all just watch, bitching about it, without really offering solutions. For example limiting short selling to the lame politician seems a good idea to limit downside pressure / profit off equity collapse.  Is there an alternate idea that would do that that is less damaging?

Who knows who is reading...  It might just start a critical mass...  (apologies- if this is to optomistic a post for this morning)

Thu, 08/11/2011 - 10:12 | 1550669 Abitdodgie
Abitdodgie's picture

You are missing the point the TPTB do not want to fix anything they want the end of the Constitution and the fall of America .

Thu, 08/11/2011 - 12:05 | 1551182 fledermaus
fledermaus's picture

Could be but...

I thought they needed serf labor / middle class money to pad their pockets?  If the system goes down are they sure they will profit more than they are now?  Hard to imagine... Because I think we're beyond the sweet spot for milking us.  Dimishing returns from here down because even as slaves the output is going to be less than it is now for the masses of keptocrats.  i.e. they are killing the golden goose, by reaching in, to get more golden eggs.

 

-LONG GOLDEN EGGS!

Thu, 08/11/2011 - 09:08 | 1550365 rsnoble
rsnoble's picture

Ok.....so what happens here in the US if you're short and they ban shorting?  Do you get to unwind or is your account just frozen till the end of time until what your short either goes bk and you can't cover or what?

Thu, 08/11/2011 - 09:12 | 1550379 Sudden Debt
Sudden Debt's picture

Like in 2008 you could still buy puts but if you expired them and didn't have the shares you got this message that it was illegal, and nothing happened after it :)

 

Thu, 08/11/2011 - 09:12 | 1550372 slackrabbit
slackrabbit's picture

Yes that's right you scurvy dogs, ban short selling

Yes that will sort it.

And please for the Zero Hedge Pirates here ...please...please keep sorting it....and all the while our booty of  gold and silver glows a little brighter

Thu, 08/11/2011 - 09:13 | 1550386 More_sellers_th...
More_sellers_than_buyers's picture

I used to be a specialist and I remember companies crying that shorts were killing their stocks>>those mean short sellers! I had the same conversation over and over...what they refused to understand is that if there was nothing wrong with the company then all they were doing is makiing future buyers.  Short selling is an integral part of a market.  Tell the players they can't play they will take their ball and go home, then all you have left is crickets.  If I owned a company with a great future , or was president of a country with great prospects I would welcome the world to short my stock or currency or bonds.  C'mon in boys,,,but this is gonna hurt! HAHAHA The whining comes from the crowd who have something to hide and know the sellers are right!

 

Thu, 08/11/2011 - 09:14 | 1550392 monopoly
monopoly's picture

I just cannot believe that they would be so stupid. And agree, trading this market is absurd. Glad to see gold pull back, we need it to rest for a while, and we can get a sharp dump, but I  do not think it will last. The ones to watch are the miners. Will they decline, as they have done so many times when gold retreats or are they finally coming into their own and going to reflect reality. Even gold at 1,600 is positive for all the good miners, not one has predicated future earnings even at that level.

Maybe, just maybe our patience is paying off. Long a bunch and no shorts. I do not even try to time this broken market.

Thu, 08/11/2011 - 09:19 | 1550414 slackrabbit
slackrabbit's picture

'I just cannot believe that they would be so stupid.'

I can.

Thu, 08/11/2011 - 09:16 | 1550400 dvsteenk
dvsteenk's picture

shorts about to gettin lynched

but only today

i think

Thu, 08/11/2011 - 09:20 | 1550424 æther
æther's picture

Sorry, but I have never seen the advantage of short selling.  You take unlimited risk for a finite profit (if stock drops to 0). 

 

What's wrong with buying a put?!  Only money at risk is the capital you put up.  No selling of shares in the market and artifically screwing with the price.  Profit is nearly unlimited depending on the trade.  Still don't get this. 

Thu, 08/11/2011 - 09:23 | 1550440 buzzsaw99
buzzsaw99's picture

Poor man's short squeeze. Pitiful, they don't even have enough money to run the shorts out the old fashioned way. Be afraid.

Thu, 08/11/2011 - 09:26 | 1550457 Kat
Kat's picture

How long before our pack of morons impose this stupidity on us?

Thu, 08/11/2011 - 09:41 | 1550551 pan
pan's picture

Price discovery ban!  Fascism bitchez!

Thu, 08/11/2011 - 10:09 | 1550599 FunkyOldGeezer
FunkyOldGeezer's picture

Enough is enough.

What we're seeing at the moment is nothing short of a war going on. A financial war that could (a) undo countless years of human progress (b) achieve something countless wars never did; the complete and utter decimation of the human existence.

Recent events have shown one human trait in all its ugliness...Fear. Fear is a far greater emotion than greed and truly has no limits. Man's ability to destroy is acted out far more violently and far more quickly than his abilty to build. The future lives of hundreds of millions (if not billions) of people are being played out, by people who are afarid of losing (their) money.  It's one thing to cover yourself, but quite another to openly short just for the hell of it. Unfortuantely, there is no way of easily distinguishing between the two motives and at present it's obvious that most people are shorting to make money on a sure bet, born out of collective fear and panic. I for one, believe it is totally wrong that financial terrorists ('cos that's what some of them are) should be able to force the liquidation of whole countries. They certainly wouln't be able to do so without short selling.

Some of the stock markets have lost well over 50% from their highs. OK, so let shorting happen until they lose 100% from their highs, then what would you have? A free market that would have nothing to trade in. Complete countries effectively wiped out and eventually as the shorters short everything they can  (because it wouldn't stop at Europe), maybe even the USA would be totally wiped.

Is that really what you want? I can't see who would win in that situation.

Surely there are less damaging ways of effecting an equilibrium?

Thu, 08/11/2011 - 09:58 | 1550612 Chuck Mentzel
Chuck Mentzel's picture

Stock exchanges are financial casinos. No added value is created by speculation on expectations of prices going up or down. Paper speculation is not economics, it's casinomics. It's people trying to make "easy money" without making any product or service which is indelibly tied to a tangible asset. It's meta-economics = casinomics, betting on price changes, making money out of other people actually working to make a product/service.

If a company wants capital, it should get a loan or make reserves or ask shareholders for it. If you want to invest, you should be able to negociate with the company. Everything else is casinomics.

Thu, 08/11/2011 - 10:18 | 1550681 TruthInSunshine
TruthInSunshine's picture

It is now 10:14 am eastern standard time.

All I know is that the spreading headlines of the ban on short selling, which is now spreading from Italy and France, to Turkey and other nations now, makes me more of a bear than I've been - well, ever.

Let them institute this desperate measure, let it spread far and wide, and this will be the catalyst that will make 2008-2009 (or 1929 or 1932) look like a mere warm up.

All these mechanisms, controls, coordination, jabber-jawing - it all reeks of desperation on the part of those clueless people who are in charge, and plays perfectly into a rational theory as to why the markets are all heading lower; the CONfidence is rapidly evaporating.

Thu, 08/11/2011 - 11:33 | 1551002 falak pema
falak pema's picture

In the financial world, one can ask oneself this question : IS there a market today? Or is it totally in the hands of the Oligarchs, the 0.1%, who own the financial system to 70% of all its transactions and who stack the deck of the current currency and interest rate derivatives war to their own interest knowing full well that the minority 30% have to folow the trend like docile herd; and damn be their consequences for the rest of the world including the common man. In this context, the whole notion of free markets becomes a sick joke!

Keeping in mind that the continuing FED strategy of ZIRP, as surrogate to the Oligarchs, feeds the speculative beast of the oligarchs with free money to play self destructing Casino royal! You have the 'most respected' bank in the West who fuels the flames of this crazy war...

Thu, 08/11/2011 - 12:54 | 1551288 Chuck Mentzel
Chuck Mentzel's picture

I think it's more than that. Those who participate in this market, but at the same time complain and whine about it are the double-crossing bitches. They complain with their mouth because the market is rigged, but hedge their bets with buying gold and other assets from the money they made on the market.

But they don't understand that BY participating in this market they encourage the Fed to pump money to inflate stocks. If they think the stock market is important for the economy (although it is purely speculative), the FED will pump money to inflate the prices of stocks. Then "the investors"  will complain the Fed is fucking with the markets. Who's the bitch then? If you make money with one hand (speculative money, money out of inflated stock prices) but buy tangible assets with the other, then you're no better than a bitch. Then complain about the Fed.

These are not investors in the economy, they're casino players who pass the price increase in stocks and commodities on the CONSUMER. Then complain about how the consumer is unemployed, is not buying enough, or is full of debt. This is casinomics.

Thu, 08/11/2011 - 10:16 | 1550684 PhD
PhD's picture

Would this ban force current short possitions to be covered or would it just precent new shorts from being conducted?

Thu, 08/11/2011 - 10:21 | 1550715 FunkyOldGeezer
FunkyOldGeezer's picture

The markets lost their correct function years ago when simple futures contracts became more 'exotic'. They are nothing but bloated gambling dens churning profits through cycling. They collectively weild far too much power and influence for any sane person's liking.

 

Thu, 08/11/2011 - 23:44 | 1553238 PiratePiggy
PiratePiggy's picture

The ban? What's all this then as John Cleese would say? France involved now?

 

I blame the ban on the F&PIIGS.   That's right foles. There was BRIC, then there were PIIGS.  No, and you heard it from PiratePiggy first, the freakin' cause is the  "F&PIIGS"     lol

 

 

Wed, 09/14/2011 - 05:51 | 1667692 chinawholesaler
chinawholesaler's picture

Wedding Favors
Wedding Favors

Wholesale Bedding
Wholesale Scarf
Wholesale Lanyard

Wholesale Glass
Wholesale Fan
Wholesale Tableware

Personal Safety Products
Wholesale USB Flash Drive
Wholesale Cap

Writing Instrument
Outdoor Leisure Products
Coin Bank

Recorder Pen
Heating Products
Wholesale Ruler

Lady Beauty Care
Wholesale Scale
Wholesale Pen

Wholesale Clothes Rack
Wholesale Banner
Flash Gift

World Cup Products
Wholesale Calendar
Wholesale Badge

Wholesale Keyboard
Wholesale Keyboard
Wholesale Speakers

Wholesale Binoculars
Wholesale Pin
Promotional Items

Book Light
Sport Support Products
Wholesale Helmet

Wholesale Speakers
Poncho Raincoat
Wholesale Coaster

Vocal Concert Products
Garden Decorations
Promotional Gifts

Wholesale Scarf
Wholesale Playing Card
Promotional Gifts

Wholesale Glove

Do NOT follow this link or you will be banned from the site!