Posted on 05/18/2010 11:12:27 AM PDT by nickcarraway
The stock market fell deeper into the red amid reports that Germany will issue new restrictions on bearish trading.
SNIP
Germany will ban so-called naked short-selling from midnight, a lawmaker with the ruling Christian Democratic Union told Dow Jones Newswires. He added that Chancellor Angela Merkel will announce the plan in her speech to the lower house of parliament Wednesday morning.
Naked short selling—which differs from short selling in that the sold shares aren't borrowed in advance—came under fire at the height of Greece's struggle to refinance its debt, with many euro-zone governments saying such transactions in credit-default swaps, a type of default insurance, artificially inflated Greek funding costs.
(Excerpt) Read more at online.wsj.com ...
Kind of like yelling “STOP” at the incoming tide.
Then the Obummer administration must be getting ready to do the same.
Yep.
Look at the actions of the nit-wit Chris Cox during our market melt-down. Ban shorting... of only financial companies. Meanwhile, options were still allowed, futures were still allowed, etc.
There are so many ways to take up a short position that banning direct shorting isn’t a smart move.
Now, the Germans are doing something smart - banning “naked” shorts - but they should do this when the market is normal, not in a turmoil. The banning of naked shorts is something that should be done in the US equities markets too.
Naked shorting should be illegal.
Why?
I have no problem with banning naked short selling as long as short selling remains in place.
If this is true, it’s a stupid move. Shorts play a big role in keeping big markets liquid.
I don't know why, but I thought of Danny DeVito when I read your post.
You have to have a lot of assets to go short naked.
And that’s the truth!
The manipulator does not have to put up any money.
Naked short selling is already illegal here, as far as I know.
>>The banning of naked shorts is something that should be done in the US equities markets too.
Naked shorting is already banned in US markets.
They were doing it all through 2008. The hedge funds are allowed to do what ever they want to do. They own the Senate.
Naked shorting is nothing short of counterfeiting a stock. Create the stock out of thin air and sell it by not borrowing it from the DTCC.You dilute ownership and flood the markets thus causing a drop in price.
Another thing, when Goldman and these other companies were selling naked shorts on Bear, Lehamn etc-they never covered their postions,thus the taxes made from the profit are not owed.
The most profitable scam on wall street in the hisotry of this country is naked shorting. They have made trillions putting companies out of business
I know that it has become a standard practice over many years now, and never prosecuted but as God is my Witness, I still believe naked shorting remains illegal.
It is just in the not illegal, illegal catagory sort of like illegal immigration.
I agree with the rule. You shouldn’t be allowed to sell stock that you don’t own, or offer to sell stock that isn’t available for you to own.
Since the “stock market” is in fact a snapshot of the shares offered for sale at a particular point, allowing a well-financed trader to essentially offer for sale MORE than the total shares outstanding in a company, at a loss, allows that trader to manipulate the market, forcing the stock lower, when in fact there is nobody at that time who really wanted to sell the stock.
But having done so, in this environment, scares real holders of the stock into selling THEIR shares,and so the trader makes money on the panic he induced by “selling” stock he didn’t have.
Short sales should require that the seller have available for purchase sufficient shares to cover his sales to the purchasers.
In naked short selling, it's possible for me to "sell" more stock than actually exists. It's counterfeiting shares.
This should have been done years ago....
Reminds me of a News Lead-In I heard the other day....here in OK.
The bit was something like this...: "Employees of School Districts to be screened for Felonies"....My friend and I both looked at each other and said..."They aren't NOW!!??!!???"
Of course you are right. This is a desperation move by a politician with no understanding of how the markets work. A stupid “blame Wall Street” mentality.
Short selling shares, even naked, injects liquidity. Short sellers did not create the financial crisis.
EPIC FAIL by Merkel, which will really sink the Euro even more.
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