[Cynus]

Form the WSJ: SEC Plans to Temporarily Ban Short-Selling

The Securities and Exchange Commission took its most aggressive assault against bearish stock bets by stating its intention to issue a temporary ban on short-selling.

SEC Chairman Christopher Cox briefed Congress late Thursday ... It's unclear if the SEC's intention has been approved by the commissioners ... which stocks are covered or for how long it will be in effect.

[TreebeardsUncle]

Was thinking about running over to WFB and placing puts on AIG on Monday. Never actually got around to it. Actually haven't done any options trading, due to concerns about initial wrong-way bets being multipied many times over to generate huge losses.
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[Daculling]

You might be a terrorist if you sell short... wow this is getting surreal. I'm closing my positions.

WSJ

The feds have seen a possible similar trends operating on Wall Street recently and no end to the panic selling on Wall Street. US corporate regulator, the SEC, is seeking to ease the terror by implementing emergency rules relating to short selling.

[jbrovont]

With the credit market in cardiac arrest this is interesting. The Fed has just declared a monopoly on shorting the market.

Let me walk you through the process:

1) A bank gets in a cash pinch
2) With no where to turn, the bank has to ask the Fed for money
3) We all saw, FNM, FMC, LEH and AIG. We know how this plays out - we sell.
4) Stock slip tightens cash crunch
5) Bank get's loan if and only if the Treasury gets controlling interest in warrants
6) Government owns former bank's assets
7) Government gets to fire-sale bank assets to buddies
You get to pay the difference in tax

[nobodypanic]

those F'ing %^$%##^%$!

fark.

[Iaato]

This and the $180 billion in new international swaps are the real reason for the late stock surge today. Not the discussion about RTC-the sequel. No matter what the fundamental value of the stock, our US stock markets are no longer allowed to go anyway but up. Even our local paper had two articles today commenting on the demise of free-market capitalism.

[shortonoil]

Iaato said:

No matter what the fundamental value of the stock, our US stock markets are no longer allowed to go anyway but up.

The point when people are willing to dump stock at a loss is already here. Unless the government is willing to buy all of Wall Street, stock will still fall. They are undoubtedly willing, but obviously not able.

[smallpoxgirl]

Does anyone else feel like they've just stepped through the looking glass? The world has just gotten very bizarre.

[Iaato]

I comfort myself, SPG, that the edifices coming down are all paper games in our urban financial centers. It helps to steady the dizzy, whirlling feeling. Focusing on basic needs and preps at the local level keeps things real and grounded for me.

[Tyler_JC]

I feel like I've just been robbed!

What happens to the SKF now?

[nobodypanic]

I feel like I've just been robbed!

What happens to the SKF now?

excellent question.

i believe SKF uses synthetic shorting and doesn't actually short. i guess they do it by put options that sort of thing.

however, i defer to someone who actually knows about this crap.

[AgentR]

It was noted long ago... A free market democracy is a wonderful, beautiful thing, until..

The people realize they can vote themselves money.

Fate was sealed a while back, its now only a question of watching which toes get stomped first as the thing comes apart.

[nobodypanic]

It was noted long ago... A free market democracy is a wonderful, beautiful thing, until..

The people realize they can vote themselves money.

Fate was sealed a while back, its now only a question of watching which toes get stomped first as the thing comes apart.

funny the people never voted themselves universal higher education and healthcare, huh?

it isn't a democracy, it's a plutocracy. and they've been voting themselves money for a long long time.

[mattduke]

When in the course of human events...

[AgentR]

it isn't a democracy, it's a plutocracy. and they've been voting themselves money for a long long time.

I don't think the plutocrats part in this is so bad really; they vote themselves money and projects and expenses and activities all in the course of organizing and orchestrating the labor of thousands or millions.

Where the damage comes is when The People, individually, get money for nothing. It equates no work, no production with some odd number of a type of currency. If no work is worth $1000, why shouldn't no work be worth a $5000 check next year?

Now the plutocrats are trying vainly to plug a whole that can't be plugged, and they'll manage to keep the boat afloat for a while, but none the less, sitting on my butt watching the backs of my eyelids is worth $1000 today; but tomorrow... I might want more, no?

[Cashmere]

Cube, you out there dude? Not 48 hours ago you said "they'd never ban short selling."

Whoops.

That's like a JDenver call for oil dropping. For about 2 months every time that dude called a top, we'd get a spike w/in 12 hours.



The PTB will do anything they want.

What is so hard to understand about that?

The people will either react or they won't.

I love that some people are recommending that, "you contact your senator/congressperson".

Jeez, with few exceptions, these people are morons.

What's the point of calling morons to deal with a

once in the history of humans economic catastrophe.

Are you still with me?

Cuz this one's a beaut.

I no longer view PO as the most critical near-term problem.

I think total economic collapse and martial law may be effected well before the words "Peak Oil" ever become mainstream.

I think, sadly, that it's entirely possible that one day soon I won't be able to log into this web site.

Weird, huh?

I now believe there is a small and growing chance that the govt. will go into lock down at some point in the next 12 months.

[DantesPeak]

I feel like I've just been robbed!

What happens to the SKF now?

excellent question.

i believe SKF uses synthetic shorting and doesn't actually short. i guess they do it by put options that sort of thing.

however, i defer to someone who actually knows about this crap.

That's right. This will have no effect on the operations of SKF, and many other ETFs.

[MOCKBA]

And besides there are so many ways one could create synthetic shorts with derivatives... F.e. http://www.voptions.com/bearish_strateg ... _stock.htm

Not all would be allowed to trade this however, only wealthy and experienced.

I first panicked because short-sellers are the buyers in the down-trend who stop the bottom of the market from falling off, but cooled down by now because the market would still function and would be arbitraged via synthetics. It would be more expensive though and more volatile...

If they would ban short-selling 10% daily moves in any direction would be no surprise... People would be sucked into false rallies and would be punished and the same is equally applicable to bears that would be killed by false optimism...

[JohnDenver]

Cube, you out there dude? Not 48 hours ago you said "they'd never ban short selling."

Whoops.

That's like a JDenver call for oil dropping. For about 2 months every time that dude called a top, we'd get a spike w/in 12 hours.

Yah, and then it dropped like a mother f*cker. Hope ya enjoyed the ride down, y'all

Banning short-selling is an excellent, common sense response to the current situation. I'm surprised its taken them this long to try it. About time somebody got the bugspray and started hosing the vermin infestation we euphemistically call the "financial system".

Heard cube lost $7000 in two hours. Here's hoping the rest of you can be just as successful.

[AirlinePilot]

What happens after the shorts cover? Im guessing some huge bounce in the markets tomorrow, gigantic pressure to bid up, go higher, then comes the real crash, probably within a few days/weeks.

This is going to make the current volatility look like Child's play.
I'm kind of dumbfounded right now, this seems actually slightly insane. Either that or they are covering up some really big implosion that was about to go down.

Welcome to the new world. They have changed the rules of the game in midstream and be damned the consequences.

UNBELIEVABLE!