With conspiracy theorists and corporate crybabies up in arms about short sellers and their exhibitionist twins -- naked short sellers -- manipulating markets and causing the collapse of companies like Bear Stearns, the man in charge of regulating the British market, says that's just a bunch of poppycock.
Adair Turner, the chairman of the Financial Services Authority, said that the FSA's lifting of the ban on short-selling last Friday had not played a "significant" part in the meltdown that has occurred in the interim.
"So far, we have not seen stuff (that) suggests that short-selling and in particular abusive short-selling has a significant role in what has occurred, he told the BBC.
Let's recap: Last September short-selling was banned and then the ban was lifted and the market absolutely crumbled within a week. Why? Because people were concerned that the financial stocks had no value because they would require nationalization to avoid outright failure.
Short-sellers are a convenient scapegoat for the current mess but so far there's very little to indicate that it has any relevance at all.
Short selling not a factor in banking beatdown
Posted Jan 22nd 2009 6:00PM by Zac Bissonnette
Filed under: Scandals
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Reader Comments (Page 1 of 1)
1-23-2009 @ 12:28AM
say what? said...
Zac, you don't honestly believe that all the recent selling is just longs liquidating their positions, do you? This dogma of "shorts aren't the problem", "shorts create an efficient market", etc is very naive. It reminds me of the "speculators are not driving up prices" fantasy that people were pushing during the oil bubble.
Go take a look at volume on the SKF, and then tell me again that short sellers don't exacerbate the down trend.