SEC bans short-selling for financials
Friday September 19, 7:07 am ET
By David Goldman, CNNMoney.com staff writer
The U.S. Securities and Exchange Commission took what it called "emergency action" on Friday and temporarily banned investors from making profits in specific financial companies.
The temporary ban, aimed at helping restore falling stock prices that have shattered confidence in the financial markets, takes effect immediately.
Short sellers borrow stock with the aim of selling it, then buy it back at a lower price, hoping to pocket the difference. The commission said short sellers add liquidity to the markets during normal conditions, but recent unbridled short selling has contributed to the recent tailspin in the stock market.
Let me rewrite the headline so it reflects the truth of the situation:
SEC Regulation Stipulates that Stocks Can Only Increase
Friday September 19, 7:07 am ET
By St Wendeler, Another Rovian Conspiracy Co-Conspirator
Capitalism is dead. Selectively eliminating short-selling - a valid financial trade if there ever was one - is absolutely asinine and something I would expect Hugo Chavez's Venezuela to do - not the United States of America.
Long live the socialist utopia brought to us by people who don't understand the free market and either pay lip service to it or actively seek to eliminate it (the Obamessiah).
Bill O'Reilly, one of the biggest pinheads on this issue, has no @@#$5ing clue about capitalism, financial markets, or what speculation actually is. He's been a disgrace to free market principles for the past few years when attacking oil speculators, short sellers, etc.
Where are the oil speculators now, Billy-boy?
And it's sad to see John McCain take on the same line of attack against "speculators" and short-sellers. From the WSJ today:
But regular short selling is not fraud. It adds valuable information to the market about what investors believe to be the price direction of a stock. Demonizing short-sellers as a band of criminals, or barring short-selling outright in financial stocks, as regulators in the U.K. did Thursday, removes information from the market.
While he was at it, Mr. McCain added the wholly unsupported assertion that "speculators pounded the shares of even good companies into the ground." It wasn't very long ago that he blamed speculators on the long side for sky-high oil prices. Then oil prices fell. Now Mr. McCain wants voters to believe speculators are responsible for driving mismanaged financial companies to ruin. The irony is that this critique puts Mr. McCain in the same camp as some of the Wall Street CEOs who have led their firms so poorly. They also want someone (else) to blame.
In case Mr. McCain is interested, overall short interest in financial companies actually declined by 20% between July and the end of August. That's right: Far from driving this crisis, shorts were net buyers of financial stocks this summer, as they must buy stocks back to close their positions and realize their gains (or losses).
In a crisis, voters want steady, calm leadership, not easy, misleading answers that will do nothing to help. Mr. McCain is sounding like a candidate searching for a political foil rather than a genuine solution. He'll never beat Mr. Obama by running as an angry populist like Al Gore, circa 2000.
It's the age of unreason...
ARC: St Wendeler