The Securities and Exchange Commission ended the 16-day ban on short selling Oct. 9, which has left many journalists asking if the ban actually worked to keep more banks from failing.
The staff at the Business & Media Institute's video blog, "The Biz Flog," could have told you the ban wasn't a good idea when they put together "Who's Afraid of a Big Bad Short Seller?" But, it's nice to see some members of the media questioning if the ban worked:
"While the ban was in place, other market forces pushed key indices into a rapid decline. We are going to see if that ban actually slowed the freefall or perhaps made it worse," Fox Business Network host Alexis Glick said on "Money for Breakfast," Oct. 9.
Glick went on to point out that the ban also affected companies that weren't banks:
"This time around it was a massive ban on all financial institutions and then you had the likes of CVS and GM and GE. I mean the companies on the list of just a little less than a thousand were massive, but did it really have any proper impact on the equity markets?"
Peter Cardillo, chief market economist at Avalon Partners, told Glick that the ban didn't work because, "If you look at these prices they still went down and most of these companies are still at yearly lows."
But they weren't the only ones skeptical of the effectiveness of the short selling ban. Tom Petruno, a blogger at The Los Angeles Times' "Money & Co." blog at LATimes.com put it to the numbers:
The ban took effect Sept. 19. Measured from Sept. 18 through Wednesday, the average financial stock in the Standard & Poor's 500 was down 23.5%, compared with an 18.4% drop in the S&P 500 itself. Maybe the financials would have fared worse without the ban, but the SEC's move also wreaked havoc with the market in other ways.
Petruno cited a Bloomberg piece from Oct. 9 which said that since the ban there were larger swings in the marketplace:
NYSE Euronext Chief Executive Officer Duncan Niederauer said Oct. 1 that the ban slowed stock trading and contributed to wider swings in prices. Average daily volume of shares on the New York Stock Exchange was 2.31 billion in the week the ban was adopted, compared with 1.5 billion in the 13 trading days since.
The restriction made stock trading more uneven because it "substantially" widened the gap between prices sought by buyers and sellers, Credit Suisse Group AG equity strategist Ana Avramovic wrote in a Sept. 30 report.
—Paul Detrick is a research analyst at the Business & Media Institute.
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Naked short selling
October 9, 2008 - 15:03 ET by toucheThe dirty little secret is SEC can't seem to get a handle on the illegal activity of naked short selling. Millions of shares were being sold short by hedge funds and such, who never had nor were they planning to have the stocks they sold. Check out www.deepcapture.com to get a little insight into the stealing going on...
Bush = Herbert Hoover II
October 9, 2008 - 15:39 ET by PopularTechAmerica's Great Depression (PDF)
"When Hoover finally took over the White House, he followed his own advice, and made it an engine of interference, first pumping more credit into an already overheated economy and, then, when the bubble burst, doing everything in his power to organize government rescue operations."
1931: The Tragic Year (America's Great Depression)
"As early as mid-July, Hoover returned to a favorite theme: attacking short-selling, this time the wheat market. The short-selling speculators were denounced for depressing prices and destroying confidence; their unpatriotic "intent is to take a profit from the losses of other people"--a curious charge, since for every short seller there is necessarily a long buyer speculating on a rise. When the crisis came in the fall, the Stock Exchange authorities, undoubtedly influenced by Hoover's long-standing campaign against such sales, restricted short selling. These restrictions helped drive stock prices lower than they would have been otherwise, since the short-seller's profit-taking is one of the main supports for stock prices during a decline. As soon as the crisis struck in the fall, Hoover reverted to his favorite technique of holding conferences. On September 15, he laid
plans for a Conference on Home Building and Home Ownership to be held in December, to promote the widening of home ownership and to lower interest rates on second mortgages. The resolutions of the December conference originated many of the key features of later New Deal housing policy, including heavy long-term credit at low rates of interest and government aid to blighted, low-income housing "
This is not Hoover
October 9, 2008 - 23:06 ET by Lame CherryOne has to be extremely careful in quoting sources as if one asks themselves the question:
If I plundered the American economy in 1930 by deliberately rigging the same collapse my inheritors did in 1977, the dotcom and currently, would I fund information blaming Hoover to keep people from arresting me or would I allow people to figure it out and throw me into prison?
Obvious propaganda flows to blame the dead Hoover as most people are not adept enough to understand cause and effect economics.
Who benefited from the 1929 collapse? JP Morgan and the Rockefeller proxies of the European cartels.
That is why in jigging the economy in a Clinton recession after 9 11 they gave President Bush no alternative but to print up a trillion dollars to stop a real global depression which was about to envelope the world.
So for all the accusers of Bush = Hoover, what would you do to solve the problem? There is nothing that can be done but print money, the financiers plunder in order to save the majority of people from a depression.
The Great Depression would have ended, just like the one started under Jimmy Carter ended by production during Ronald Reagan's term if FDR had not kept it going to get himself elected to the executive for 16 years.
There has been a great deal of bogus rewriting of history in the last few years as the cartels are covering up what they did in 29 in now blaming Hoover, so they can blame a politician again and install........gee another Marxist like FDR in Barack Obama to complete the fascist age by making it a communist state.
Short selling exactly like after 9 11 is done by the cartels to rape economies. It is why South Korea banned it too. The simple process is one bets the stock price will go down and makes money on doing that.
Now how rapist is that and unAmerican in betting on disaster, causing disaster and profitting off of the many's disaster so a few can get billions more.
Hoover was absolutely correct in his actions. He was absolutely correct if people simply invested and carried on their normal economic lives the economy would recover.
That is the policy being enacted currently, but Warren Buffett wants people to have all their money out of stocks and out of banks and into areas where he can plunder it as money is going to double in a short period of time in buying power.
Information posted which is propaganda does no service to anyone except the financiers who cause the catastrophe to begin with. Posting a cut out of propaganda is no different than posting a cut out of Mein Kampf or Mao's little red book.
There is a deliberate Boa Effect occuring in this period of constriction and the solutions are more important than falsely blaming the people who have kept America out of a literal depression since Sept. 11, 2001.
No one seemed to be bitching about George Bush handing out rebates as they took that money which I did not. No one seemed to have a problem in George Bush not raising taxes on you so you had money to do things like waste time posting on the internet.
Get the facts straight and if one does not understand the facts, look up Victor Hanson, the Milton Friedman group or even Benjamin Franklin's unfinished autobiography as the answers are all there in non American bashing terms.
God bless
*HIC IACET ARTORIVS REX QVONDAM REXQVE FVTVRVS
Economically Clueless from the Blind Bush Bot
October 10, 2008 - 01:02 ET by PopularTechI am so happy that the New World Order orchestrated the recent collapse so we now know who is to blame. Every single one of your posts gets more delusional as they go.
Causing inflation does nothing but cause inflation it does not fix the problem which is a combination of the Federal Reserve and Government intervention into the market which your buddy Bush is guilty of as much as Clinton...
Bush's 'American Dream Downpayment Act of 2003' (Lew Rockwell)
Bush 'No Money Down' - Tax Payers Will Pay (Video) (6min)
Bush seeks to increase minority homeownership (USA Today)
Bush to End Scarcity (Ludwig Von Mises Institute)
Not only is Hoover to blame but so is FDR for prolonging the Depression to a full decade...
How FDR Made the Depression Worse (Robert Higgs, Ph.D. Economics)
How FDR's New Deal Harmed Millions of Poor People (Jim Powell, B.A. History)
The Mythology of Roosevelt and the New Deal (Robert Higgs, Ph.D. Economics)
The New Deal Debunked (Thomas J. DiLorenzo, Ph.D. Professor of Economics)
The New Deal Debunked (again) (Thomas J. DiLorenzo, Ph.D. Professor of Economics)
The Truth about FDR (Thomas E. Woods, Jr. Ph.D. History)
Tough Questions for Defenders of the New Deal (Jim Powell, B.A. History)
You solve the problem by letting the market correct itself, drastically cutting taxes and drastically cutting government spending.
You don't solve the problem by causing hyperinflation.
Try not being a Blind Bush Bot for once in your life and get honest. Your posts are the most wildly conspiratorial, defend Bush at all ridiculous costs, no matter how much of a problem he added. Yeah sure this helps make the football partisans "feel" better but it does nothing to correct the problem.
If you think Socializing the financial and mortgage industries and corporate welfare has anything to do with free market economics you are beyond delusional.
»→ Back in the market
October 9, 2008 - 15:41 ET by Cool ArrowAfter watching freefall on the big board for 4 days, I couldn't stand it any longer.
I'm crazy, I know, but certain stocks just simply aren't worth 7.5% less today than yesterday.
So I plugged it all back into the market at today's close. Maybe I'll be licking my wounds tomorrow, but somehow I don't think so.
LYDSEXICS UNTIE!
"So I plugged it all back
October 9, 2008 - 23:32 ET by ckc1227"So I plugged it all back into the market at today's close. Maybe I'll
be licking my wounds tomorrow, but somehow I don't think so."
Even if you are tomorrow, you won't be licking them for long, assuming that government doesn't keep meddling. If they do, all bets are off.
Obama's Economic plan: more taxes, more spending, more regulation. Prosperity here we come.
OK, naked short selling is
October 9, 2008 - 15:53 ET by jdhawkOK, naked short selling is at fault. Name one person or company that has even been accused of the crime much less charged?
No, don't have any?
Meanwhile, the only thing that prohibition on short selling did is disallow the little guy from doing so. The equivalent of short selling these financial stocks was done via put options, stock futures and options on stock futures. One has to be truly naive to think a ban on short selling was going to stop the prices of these companies from going down. In fact, not doing it and not yammering about having to do it would instill some modecum of confidence in the market, not running around in an hysterical manner shouting the sky is falling.
The latest reason that stock owners of financial companies are running for the exits is Paulson's brain dead idea to buy stakes in our banks. This is highly dilutive to the common shareowner. Notwithstanding all the turmoil in the market, this plan is causing the stock price of financial stocks to plumment.
KLINTON LEGACY: SUBPRIME MELTDOWN
October 9, 2008 - 17:22 ET by reelman46KLINTON LEGACY: SUBPRIME MELTDOWN
Well, HornDog got past his other gifts that keep on giving…like staining the White House forever…he has moved to new heights.
This is an example of what liberalism can do to any country.
During Klinton’s 8 years his “feel good, good intentions, diversity
police” hammered the banks to make loans to MILLIONS of people that
could not afford them…heck, 5 million illegals got home loans without
an SS card! Isn’t that sooo special? So very “democrat”?
Thanks Bill…You “did us” again…you and Raines, you and Johnson, you
and Gorelick. These (3 former Klintonite) looters took well over 125
mil out of F & F while cooking the books. That used to be a crime.
Not to worry, Barney and Chris, along with black congress folks gave
cover to the looters while the diaper-changing lib media did nothing.
They trashed Bush, Baker and McCain…democrats were doing what they do
best…charging anyone that challenges their cancerous socialism with
harassment, racism or partisan smears. Thanks a yahoo.
So here we are. Here YOU are.
The historical facts are still hidden under the lib media rug and
only the new media has revealed any truth about the culprits that are
now affecting-infecting your IRA, your 401K and much else. Ya like them
apples?
Stop complaining…the democrats meant well. Results don’t matter.
Truth doesn’t matter. Only blame-shifting and cover up matter to the
modern liberals. You have been snookered again by the secular
socialists. Did I mention the looters are advisors to Obama?
Doug Schexnayder, Ph.D. (theconservativecrawfish)
Interesting... the
October 9, 2008 - 18:10 ET by IndigoChillInteresting... the government's trying to get money to move and get people to buy stuff. Just kidding! Don't try to use the economic stimulus to stimulate the economy...
The Boa Effect
October 9, 2008 - 22:46 ET by Lame CherryThe reality is short selling stopped market plunder which happened directly during 9 11. If the media shills complain it was shut off this time, it was a good thing.
What needs to be explained is the Boa Effect.
Finance explained 101: The Boa Effect
OK you want to make a single western currency, so you make all the central
banks of nations join into dumping money into the plunder by the
Rothschild led cartel who stole all the money legally.
Next,
you plunge markets to drive people's savings from the markets where
they sell and cash in. This cash then is available for the cartels to
direct where they want it invested in so they can get their hands on it
as cash is going to double in value in a year.
Also, you have
the Fed cut interest rates to drive money out of savings accounts in
banks coming out of the stock market so people put their money into the
cartel's investment plunder.
In all of this, gas prices are
going down which means inflation will be going down, but all the media
trumpets wall street constrictions to worry dolts so they swing votes
will side with the nation rapist's candidate, Barack Hussein Obama.
The fix is simple:
Do not put your money into gold or other investment nonsense.
I
ask you to remember that the dollar is rising now from 30 cents on the
dollar to what will be 60 cents in the near future in buying power.
This is why the cartels want to relieve you of your money.
Now ask yourself, is any investment you are going to make going to double your money in a short time in buying power?
I
will answer for you as you are in a mess and if you are reading this
you don't know dick about economics or investment. No, so keep your
money. Put it into a secure local bank on short term CD's in bulk,
bonds if you like which are tax free where your money should have been
all along and simply stop worrying and wait for the situation to level
out.
The stock market was over valued and should have only been at 8000. So that is probably where it is naturally going.
That
is your fix in the short term. In the mid term vote John McCain and
Sarah Palin as they are going to provide the production fix in this.
In
the long term, purchase a share of your stocks in your local nuclear
power plants which are going to be built, stay out of debt, put money
into tax free bonds and stop being herded by the money masters as this
is the Boa Effect in their constantly inflating their snake body,
grabbing idiots who invest their money in wrong places and the
constricting the economy and the life out of citizens retirements.
Read
it over a few times as it is free advice so it is not going to cost you
anything and you can sleep at night knowing you were not part of Warren
Buffett's rapine as he gets his billions from other people loosing
money.......you as in the other people.
agtG
*HIC IACET ARTORIVS REX QVONDAM REXQVE FVTVRVS
Short Selling is not the problem
October 10, 2008 - 01:15 ET by PopularTechDon't Sell Short Selling Short (Gary M. Galles, Ph.D. Professor of Economics)
Short-Sale Restrictions Are an Exercise in Naked Power (Robert Murphy, Ph.D. Economics)
The SEC Short Sells Us Down the River (Robert Murphy, Ph.D. Economics)
Banning short selling actually makes the problem worse as we are seeing.
Care to expand, PT?
October 10, 2008 - 01:17 ET by BlondeI have more than a rudimentary understanding of the markets...but I am kind of freaked right now.
The Asian markets are off by 7 - 10 percent right now.
I feel like a huge hurricane has a bulls-eye on my forehead.
And I can never think rationally when I'm "in the cone".
And that was a serious question, PT. All bullshit aside.
David Gregory, do you know which damn network you lie for? ~ Uncle Jimbo, @Blackfive
Hey Blonde
October 10, 2008 - 01:44 ET by MrShyNo, not PT... :p Still up, btw ???
Hey, what channel shows the Japanese/other markets? I'm up all night, so what the hay. :)
NOW PLAYING:
Governor Palin Get Your Gun
Shy, LMAO!
October 10, 2008 - 01:48 ET by R D HelmI'm up all night
Well, you aren't the only one. :-)
-Dave
If this nation is to be saved, it will be libertarian principles that save it.
Dave!
October 10, 2008 - 02:27 ET by MrShyWe're just two unemployed, slacker "neocons", I guess!
:p
NOW PLAYING:
Governor Palin Get Your Gun
Explaining Short Selling
October 10, 2008 - 01:45 ET by PopularTechShort Sellers only make money if they are right about a company's stock being valued more than it is. They usually have uncovered information before others have and use this information to bet against a stock. Now if their information is wrong the stock will go up regardless and they will lose money. So the one's who stay in business have to be right. What short-sellers do is alert the market to a problem early they do not cause a stock to go down. It is better a stock is corrected early than take a huge dive later with further malinvestment by investors not knowing the true state of a company's financial situation.
Think of a short-sellers as the one's who bring the bad news no one wants to hear but winds up being right.
Think of the Enron and Worldcom accouting scandals.
Shortsellers obviously make enemies with companys with something to hide and with regulators who look bad by not uncovering the problems the short sellers do.
The "Morality" against Short Sellers
October 10, 2008 - 01:57 ET by PopularTech"Many investors love to hate short-sellers because they see them as people who are rooting for others (companies and investors) to fail. What they're missing is that short selling is an integral part of a well-functioning market, since it allows market participants to express their view that a stock is overpriced. Without short sellers, the market would be inherently positively biased, and stocks would be priced less efficiently. On top of that, some short sellers are outstanding stock analysts who have a good eye for fraud, mismanagement, or aggressive accounting."
By banning short-selling we are soley relying on the government to spot fraud and I sure as hell do not trust the government.
Short selling what you don't have???
October 10, 2008 - 08:05 ET by toucheI brought up naked short selling. I am told nope..not happening..no one jailed... OK no one was jail over Freddy and Fannie either...
Some explain to me why selling millions of shares of stock short that you do not own and did not borrow (this one I love, selling something you borrowed??) is good for the market? WaMu had 9 million shares that failed to deliver in 1 day. Meaning people sold shares they did not have and never had. Through out this process the call has been to stop the fake short selling not, stop the short selling. The SEC is either stupid or bought, bottom line I know the feds a clueless.
So here is my question If George Soros and other types want to destroy our Country by pumping billions into MovOn and other groups...why am I supposed to think he is not also pumping billions into our markets trying to destroy them??? You know let sell a millions of shares that we do not even have to own...you know just for fun... Whay am I to believe Soros and his type are playing fair everywhere else??