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10/22/2008

Australia continues to ban short selling

Australia must have seen the danger of short selling and is continuing its ban. And the Australian market is much bigger than ours. The US, probably the biggest market in the world, has now and then banned short selling. And we stubbornly or cleverly continue to allow short selling in our market. It must be good for us. I hope one day someone will have to account for this. And no one can claim ignorant of the damages short selling is causing to the investors and the market.

4 comments:

Matilah_Singapura said...

If you want to end up a socialist cuntry, then follow the lead of the United Peoples Democratic Union of Australia. (UPDUA)

Here in socialist Australia, we have welfare for everyone: poor, rich, indigenous, caucasian, immigrants... fi anyone has been left out, don't worry. We, the do-gooder rich champagne Marxists will be creating a welfare program, just for you — be patient.

2 out of every 3 people in Australia receive some form of welfare.

What BANNING short-selling does is NOT protect the "small investors". All the small investor has to do is exit the market, and lick his wounds and count his blessings just like everyone else (other small investors, large, institutional... whoever)

When the govt bans short-sales, it is the corporations who are PROTECTED.

When the market clearing prices for shares fall, that means the companies in question are not valued (as much) by the holders of EQUITY and DEBT. Therefore people tend to liquidate, take their money to invest in something else with potentially better return. They are simply acting as any rational person would: who wants to lose money?!?

With a short sales ban in place, people are prevented from covering their losses, and in other cases profiting from a market movement — one of the reasons for a sharemarket in the first place.

Initiating a short-selling ban is in effect STATE PROVIDED CORPORATE WELFARE, and as the usual magnitudes of corporate welfare historically go, this is in the BILLIONS of dollars.

So, if you think it is a good idea for S'pore to become a welfare state — where the govt helps EVERYONE — then go ahead, start banning short sales, and protect those GIC's from getting hammered in the market (as they should)

Anonymous said...

http://mises.org/story/3066

redbean said...

let's see how painful when dbs and glc stocks got bashed to new lows and the values vaporise. lehman's share was US$21 and went zero.

the way all the banks were walloped today must be very painful to a lot of investors holding to his shares, including those with stock options.

my anti short selling stand is that it is contrary to the normal growth of a stock and stock market. a stock market is for companies to raise funds, for investors to pick up good shares and grow with the companies in the long run.

with short selling, good stocks can be whacked down by the shortists. it destroys values for no reasons. it hurts investors, and prevents companies from raising funds in the market, and will eventually kill the market.

i am totally against this anti stock practice. people who have stocks and want to see them is ok. selling them without stocks just to destroy the value of the stock is criminal.

Matilah_Singapura said...

BTW I highly recommend Robert P. Murphy's book — P.I.G. Capitalism — it's easy to read and understand, plus there are some wonderful insights.