Bringing us closer to socialism or something like it…
The Securities and Exchange Commission today unanimously proposed new measures to make it tougher to profit by short selling stocks, including reinstating the uptick rule, although it will be months before any changes take effect.
Short selling is commonly defined as the practice of selling borrowed stocks, and then attempting to purchase them later at a lower price, thereby profiting from the drop in price.
SEC chief Mary Schapiro warned at this morning’s open meeting in Washington that “Short selling may also be used to illegally manipulate stock prices. … In addition, unrestricted short selling can exacerbate a declining market in a security.
“In the past 18 months, we have seen every major stock market around the world experience steep declines and extreme volatility in securities prices,” she said. “Although we are not aware of specific empirical evidence that the 2007 elimination of short sale price tests contributed to this volatility in the U.S. markets, many members of the public have come to associate short selling with that volatility, and with a loss of investor confidence.”
I believe it was Ludwig von Mises who when asked what was it that kept an economy from being socialist replied a functional exchange market. Looks like they are futher taking that away from us. Note how she says “specific empirical evidence.” Of course there isn’t. We are living in the times of the ban. There is evidence and plenty of theory regarding short selling but they really couldn’t care less. As is pointed out in the last sentence quoted above: “many members of the public have come to associate short selling with that volatility, and with a loss in investor confidence.” And why have they come to that conclusion? Perhaps it’s because the bureaucrats and central bankers use speculators as scapegoats for their own economic mistakes? Take a look throughout history. Every time there is a crisis, panic, resession, depression, what have you… those in power, those who created the problem, blame it or try to blame it on others. Nothing more than a distraction. For every short seller there is a buyer. Why not blame those who buy from short sellers?
