NYT Reports Eurowide Short Selling Ban Imminent
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.
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.
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Going long precious metals also to be banned.
We're run by a criminal cabal of genocidal scum, is anyone still doubting that?
Black Market prices for PHYSICAL would literally go NUCLEAR!
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.
It looks like it is once again, time to slide down the razorblade.
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.
Well someone's talking about untraceable gold.
https://www.kitcomm.com/showthread.php?t=63515
Not to mention the "untraceable guns and ammo".
: )
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.
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.
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.
If they ask for our gold,
Just give them our lead!
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.
And you think the Regime cares about harming the economy?
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.
The question then becomes "What is the felon/insurgent ratio?"
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.
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.
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.
Hmm... Is gold talk hate speech?
We only want honest price-discovery if the prices so discovered are politically convenient.
NY Times? Isn't that the rag responsible for that nutcase shooting all those people in Norway?
whatever gets them through the next 5 minutes...
Banning shorting just drives down liquidity. It's an equally deadly mix for equity values.
In related news, vultures are prohibited from cleaning up dead bodies (which should make for more "healthy" environments!)
"safer environment" - er NO, long human pathogens and flesh eating bacteria!
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.
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.
Cause nothin says "Capitalism" like banning short selling.
An HFT can place a lot of trades in 5 minutes.
evil speculators
This morning in Europe CMC Markets (an online CFD trading platform) had already made shorting of french banks impossible
Has a Thursday ever been a market collapse or do I have
wait till Friday or Monday?
Wondering about that as well
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.
Just a couple come to mind:
I think the start date of this crash is more inportant, on Obuumers birthday, the day they decided to start the death of America
http://en.wikipedia.org/wiki/List_of_stock_market_crashes
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
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?
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.
In the immortal words of William Topaz McGonagall, the greatest poet who ever lived, "We're all doomed!"
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.
Better odds are to be had in Vegas than the Euro market now
Free markets bitchez?
Long anything with negative beta. Holy shit this is a mistake.
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.
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
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.
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.
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.
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.
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?
I think that is a good question !
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!
In case someone does not know the pros in defense of short-selling:
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.
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.
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.
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.
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.
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.
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.
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?
I will gladly sell a put to you today for a security Tuesday.
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?
did with the financials in Sept-Oct '08
QE3 will be a hundinger. Add another zero to QE1. Should be another interesting weekend.
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.
I love the smell of desperate banksters in the morning...it smells like...victory.
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
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
...wow, that was quick off the ticker Tyler. Snorkin was CNBCing it and boom, yer right there. http://www.youtube.com/watch?v=qYKlYA77ZI4
Just a couple come to mind:
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.
Yes, a Thursday has seen a market collapse. See your Great Crash of '29 history.
Turkey Joins Greece, South Korea in Curbing Short Sales After Global Rout
http://www.bloomberg.com/news/2011-08-10/turkey-scrutinizes-short-sales-...
Those evil socialists!!! They need a taste of the back of the invisible hand of the free market!
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)
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).
Many thanks, sir/madam
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
+1776 ...
Anyone trying to "trade" in this Macau casino is getting what they deserve ...
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....
A few more bits of Financial repression, in all it's glory.
They're struggling to make it to the weekend.
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.
short selling or naked short selling?
+1 seems this is about naked short selling. (??)
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)
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 .
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!