Ruh-Roh

[AllentownJake]

Original post: There are headlines coming out of Germany that the government may institute a short-selling ban.

Earlier, ZeroHedge cited a Reuters article saying that a short-selling ban would apply to stocks and bonds.

But according to ForexLive, the report indicates that it's a naked short-selling ban.

There's also chatter that Merkel may push for a transaction tax at the G20 meeting.

We have no idea what's actually going to happen, but things have deteriorated in the last several minutes.

The Dow is off 57.

The euro may soon slide below $1.23.



Read more: http://www.businessinsider.com/selling-in-stocks-and-euro-intensifies-as-rumors-of-german-government-short-selling-ban-spreads-2010-5#ixzz0oJ1wWXuQ

The market calls all bets, banning short selling is almost a sure way to cause real selling. In any event government intervention into the short arena means that the government is worried about something.

[BrklynLiberal]

1. US bankers will not like this.........tough s*it for them, I say.

[AllentownJake]

2. It could crash the banking system nt.

[NJmaverick]

3. You were trying to sell end of the world economic dooms day scenarios

roughly 4 months ago and we all so how none of them panned out. So why is this time different?

[Name removed]

7. Deleted message

Message removed by moderator. Click here to review the message board rules.

[AllentownJake]

12. There was a trillion dollar bailout 2 weeks ago

Bigger than TARP. I think that qualifies for something.

[earth mom]

17. Can you post some links to this bailout? I was gone for a few days a missed this news.

Thanks! :hi:

[AllentownJake]

18. It take me a while to go back and find the original articles

http://www.reuters.com/article/idUSLDE64G29020100518?type=marketsNews

Here is some commentary recently.

[earth mom]

22. Thanks for the link-so this is a European bailout. Wow.

:wow:

[AllentownJake]

23. It is the reason their currency has been plummeting over the past 2 weeks nt

[earth mom]

24. Hold onto our hats, right?

:yoiks:

[AllentownJake]

26. Who knows

The volatility is still very much with us.

[malaise]

4. The EU voted today about curbing

http://news.bbc.co.uk/2/hi/business/10120925.stm
<snip>
European Union finance ministers have agreed to introduce tougher regulation of the hedge fund industry.

Ministers overrode objections by the new UK government and the City of London, where 80% of European funds are based.

They will now negotiate with the European Parliament to decide the exact shape of the legislation - which is due to come into force from 2012.

However, the final deal would take account of UK concerns, the EU said.
Stability risk

A UK Treasury spokesman said this was a "very good result in the circumstances, the best outcome we could have expected".
Continue reading the main story

There is a widespread view on the continent that hedge funds somehow caused the credit crunch and financial crisis of 2008.

[xchrom]

6. +1

[AllentownJake]

10. Hedge funds didn't cause the credit crunch

You borrow too much money your credit rating takes a hit and people doubt your ability to repay.

:rofl:

[Duer 157099]

5. Those sound like reasonable positions

Ban naked short selling and a tax on transactions.

If only the US had the balls to do something that might actually curb unbridaled greed and corruption.

[AllentownJake]

8. We'll see how it pans out tomorrow

The market calls all bets.

[Statistical]

14. There is no free lunch.

Banning short selling is acting from a position on weakness.

Can inspire even more selling as people simply liquidate in fear of what is this hidden reason for banning shorts.

[Duer 157099]

19. I specifically said ban on NAKED shorts

Not all short selling, big difference (but I expect you know that)

[Statistical]

20. Well naked short selling IS illegal in the US.

Enforcement just sucks.

SEC should simply do suprise audits.

At anytime demand a list of current posistions as of that second.
Any short posistion would have to be accounted for (trail of what shares borrowed when, from who).

Any short found in noncompliance would be fined 10,000% of average daily move on first offense.
Second offense doubles. On third offense, entire brokerage loses trading license for 3 months.

I guarantee you naked short selling would disappear overnight.

The watchdog needs to have real teeth, ones that can rip out giant chunks of profit from noncompliant firms.

[Duer 157099]

25. Agree. Pointless to have rules without enforcement. n/t

[AllentownJake]

21. Either way

there are trades in the pipeline that have to be unwound now, or moved to an exchange that will allow it.

[amborin]

16. +1

[uponit7771]

9. The banks have put the world in a.........bind

[AllentownJake]

11. Yep

It will be interesting to see what happens when these trades have to unwind tomorrow. Hedges can move into real sales quickly.

[Statistical]

13. euro is below $1.23. If it closes there well that will be bad.

Essentially a very visible and continual vote of no-confidence for the Euro.

Banning short selling seems stupid unless German regulators know something we don't. Something that when it comes out would result in more selling than the ban on shorts is causing.

Last tick Eur/USD cross was at $1.2201 so it could easily break below $1.22

[AllentownJake]

15. Thank you nt