What are your thoughts on this article by Barton?
"Short selling curbs for financial stocks. Does this seem like the âold boyâs networkâ to anyone else? The SEC, along with Department of the Treasury and the Federal Reserve decide to curb short selling in Fannie Mae and Freddie Mac. Oh yeah, almost as an aside, they also put the same curbs on short selling the stock of 17 other financial firms like Goldman Sachs, Lehman Brother, Merrill Lynch and Morgan Stanley. Talk about the fox guarding the hen house! And worse yet, this is another severe blow for free markets.
When a southeast Asian country outlawed short selling on their exchange, they were seen as reactionists who didnât understand how markets work and were driving their countryâs economy backward. Ditto that for the folks who want us to think that short selling is the problem. (I can assure you that not one of those astute guys and gals believe that short selling is the real issue.) We have a whole industry that made a massive error. They profited massively from their high risk strategies during the good times (remember the reports of Goldman Sachs bonuses being an AVERAGE of over $600k?). But now when we see that these highly leveraged strategies could not be unwound quickly enough when the tide turned, everyone hides behind the regulators. Limiting legitimate short selling disrupts the balance of the markets; thereâs no way to legislate ever-increasing stock prices! In fact, this is a risky move; there are studies that show down moves are more severe when short selling is limited. This is because there is little way for stock prices to proceed down in an orderly fashion if there is not a two-way market. Then when enough share holders are concerned, there is a mass exodus and a disorderly drop. Time will tell if this comes back to bite the companies that seem to be getting temporary protectionâ¦"
"Short selling curbs for financial stocks. Does this seem like the âold boyâs networkâ to anyone else? The SEC, along with Department of the Treasury and the Federal Reserve decide to curb short selling in Fannie Mae and Freddie Mac. Oh yeah, almost as an aside, they also put the same curbs on short selling the stock of 17 other financial firms like Goldman Sachs, Lehman Brother, Merrill Lynch and Morgan Stanley. Talk about the fox guarding the hen house! And worse yet, this is another severe blow for free markets.
When a southeast Asian country outlawed short selling on their exchange, they were seen as reactionists who didnât understand how markets work and were driving their countryâs economy backward. Ditto that for the folks who want us to think that short selling is the problem. (I can assure you that not one of those astute guys and gals believe that short selling is the real issue.) We have a whole industry that made a massive error. They profited massively from their high risk strategies during the good times (remember the reports of Goldman Sachs bonuses being an AVERAGE of over $600k?). But now when we see that these highly leveraged strategies could not be unwound quickly enough when the tide turned, everyone hides behind the regulators. Limiting legitimate short selling disrupts the balance of the markets; thereâs no way to legislate ever-increasing stock prices! In fact, this is a risky move; there are studies that show down moves are more severe when short selling is limited. This is because there is little way for stock prices to proceed down in an orderly fashion if there is not a two-way market. Then when enough share holders are concerned, there is a mass exodus and a disorderly drop. Time will tell if this comes back to bite the companies that seem to be getting temporary protectionâ¦"