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.

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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?

LoneStarHog's picture

Black Market prices for PHYSICAL would literally go NUCLEAR!

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.

Fish Gone Bad's picture

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

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.

Manthong's picture

Not to mention the "untraceable guns and ammo".

: )

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.

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.

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.

Beau Tox's picture

If they ask for our gold,

Just give them our lead!

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.

 

 

masterinchancery's picture

And you think the Regime cares about harming the economy?

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.

Manthong's picture

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

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.

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.

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.

Manthong's picture

Hmm...  Is gold talk hate speech?

mickeyman's picture

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

Peter K's picture

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

bigdumbnugly's picture

whatever gets them through the next 5 minutes...

Popo's picture

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

StychoKiller's picture

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

LawsofPhysics's picture

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

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.

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.

A.W.E.S.O.M.-O 4000's picture

Cause nothin says "Capitalism" like banning short selling.

GoldBricker's picture

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

caerus's picture

evil speculators

gratefultraveller's picture

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

Irish66's picture

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

wait till Friday or Monday?

jcrows's picture

Wondering about that as well

 

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.

Muddy1's picture

Just a couple come to mind:

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 

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

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?

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.

murdomcsponge's picture

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

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.

Josh Randall's picture

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

sudzee's picture

Free markets bitchez?

Catullus's picture

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

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.

 

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


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.

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.

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.