Short Selling of Banks Stopped

Sir_Humphrey

mewbie wrote: »

Therefore, arguably, the market is doing exactly what it should be, in order to flush out the weakest members to aid the survival of the fittest.

Sadly, the banking sector is the equivalent of a dinosaur. It would cost taxpayers more if the banking system suffered a complete collapse.

mewbie wrote: »

I am no money man expert, but it is surprising to hear those, bulls especially, who are now arguing for nationalisation and legislative inteference in their treasured free market. Where the hell were you when the IMF free marketeers plundered the worlds resources and turned countries, even continents, into basket cases?

It's called double standards, or hypocrisy. As I said, they are morally bankrupt now.

WTF?_2

Sir_Humphrey wrote: »

What I would expect is less government interference in personal affairs (eg I think we can safety kiss goodbye to ID cards) and more interference in areas that benefit the populations (eg more government involvement in building proper infrastructure). A lot of the busy-body stuff on individuals IMO has been a result of the loss of government function in economic affairs. Once government starts to re-focuss on these areas, you should see less bin-fining bulls**t, but more proper recycling schemes like in Germany.

I'd like to think that but I think it's more probable that we will actually see more intrusive state control.

The problem with the id scheme is that it is worth billions to whatever businesses win the contracts. Hence there will be strong lobbying for it. Ordinary people will be told we need id cards to protect us from evil terrorists, illegal immigrants stealing our jobs etc. etc. Or maybe to control movement in the event of more bird-flu media hysteria.

Generali

!!!!!!? wrote: »

I'd like to think that but I think it's more probable that we will actually see more intrusive state control.

The problem with the id scheme is that it is worth billions to whatever businesses win the contracts. Hence there will be strong lobbying for it. Ordinary people will be told we need id cards to protect us from evil terrorists, illegal immigrants stealing our jobs etc. etc. Or maybe to control movement in the event of more bird-flu media hysteria.

A trouble with socialism is that it can't work in a free society as people have this annoying habit of doing stuff the central planners don't like. Hence at present the socialist lite government introduces Stazi lite things like councils spying on you to check you're using the right bin.

Introduce more socialism and you need more state control. Look at the 70s for example where to do many jobs you had to belong to the union. Union decide they want you out? You get the sack.

avantra

Will this affect the so call Absolute funds that short sell synthetic investments?

From the late Merylinch BlackRock UK Absolute wording:


UCITS regulations prohibit the short
selling of physical securities but allow the creation of synthetic-short
investments through the use of cash-settled derivatives (as long as
any exposure created is covered by the assets of the Fund).

Sir_Humphrey

!!!!!!? wrote: »

The problem with the id scheme is that it is worth billions to whatever businesses win the contracts. Hence there will be strong lobbying for it. Ordinary people will be told we need id cards to protect us from evil terrorists, illegal immigrants stealing our jobs etc. etc. Or maybe to control movement in the event of more bird-flu media hysteria.

ID cards come up as an idea every so often. The last time was with the Tories in the early 1990s. It did not happen then, and I would be surprised if the recession did not play a part in that.

The Treasury are traditionally extremely stingy with spending (i.e penny pinching and false economisers), and have a poor comprehension of counter-cyclical spending (qv Crossrail saga since late 1980s) so calme toi. It ain't gonna happen IMHO.

The Tories and Lib Dems have both made clear their opposition in such a way that it would be difficult for them to do a U-turn and continue with the cards.

Generali

avantra wrote: »

Will this affect the so call Absolute funds that short sell synthetic investments?

From the late Merylinch BlackRock UK Absolute wording:


UCITS regulations prohibit the short
selling of physical securities but allow the creation of synthetic-short
investments through the use of cash-settled derivatives (as long as
any exposure created is covered by the assets of the Fund).

There are many ways to go short. You can buy a short CFD if anyone will sell you one. You can sell someone a put option. If you can find one, you might even be able to short a stock that moves in tandem with the stock you would rather short (for example a supplier that relies heavily on one buyer).

Sir_Humphrey

Generali wrote: »

A trouble with socialism is that it can't work in a free society as people have this annoying habit of doing stuff the central planners don't like. Hence at present the socialist lite government introduces Stazi lite things like councils spying on you to check you're using the right bin.

I think you are conflating democratic socialism with communism. With a mixed economy is more conducive to freedom. Just compare now to the 1960s. In the 1960s people were more free (in general) and that was with the mixed economy. The mixed economy is what I advocate personally.

Generali wrote: »

Introduce more socialism and you need more state control. Look at the 70s for example where to do many jobs you had to belong to the union. Union decide they want you out? You get the sack.

Perhaps you should look at what Stalin did to Soviet trade unions! Again, you are confusing communism and democratic socialism.

You knock Unions, but how much of the personal debt you see is as a result of real wage declines? In a capitalist system, the populace need enough money to consume, but the same system gradually concentrates money with the wealthy, reducing the propensity to consume and damaging capitalism. I am not a Marxist, but that is clearly a logical contradiction.

You need to get the right combination to offset capitalism's propensity to self-destruct and communism's propensity to stagnate. You are not free if you are destitute.

Generali

Sir_Humphrey wrote: »

I think you are conflating democratic socialism with communism. With a mixed economy is more conducive to freedom. Just compare now to the 1960s. In the 1960s people were more free (in general) and that was with the mixed economy. The mixed economy is what I advocate personally.



Perhaps you should look at what Stalin did to Soviet trade unions! Again, you are confusing communism and democratic socialism.

You knock Unions, but how much of the personal debt you see is as a result of real wage declines? In a capitalist system, the populace need enough money to consume, but the same system gradually concentrates money with the wealthy, reducing the propensity to consume and damaging capitalism. I am not a Marxist, but that is clearly a logical contradiction.

You need to get the right combination to offset capitalism's propensity to self-destruct and communism's propensity to stagnate. You are not free if you are destitute.

I'm not anti-union. I am against the closed shop though and anything else that delivers too much powers into the hands of a barely elected minority like trade union leaders.

You do need some things to act as a brake on capitalism: anti-trust laws for example, banking laws, consumer protection, environmental protection and so on, I agree. I don't really see any strict gradation between forms of Socialism really, they're just shades of grey and the problem I have with democratic socialism is that it's failure to work without controlling the population necessarily leads to more-and-more repressive laws coming in.

Sir_Humphrey

Generali wrote: »

the problem I have with democratic socialism is that it's failure to work without controlling the population necessarily leads to more-and-more repressive laws coming in.

But you see that in plenty of Capitalist countries as well. That is authoritarianism, not capitalism or communism. Authoritarianism can be Capitalist (eg Chile, Fascist Italy) or Communist (eg East Germany, Cuba).

blackanchorage

fimonkey wrote: »

Thanks again all for your patience.. I have another question re: short selling..

If its the ownership that's transfered, but no funds (that bit I find confusing), then going back to the beetle scenario.. The dealer has passed on the beetle to the new owner, the original owner has not been paid for it, but is being paid a yearly interest value instead... meanwhile all vw beetles break down into rust (i.e. the bank crashes and its stocks are worth nothing) so therefore the original owner looses out, as he no longer has a beetle and wasn't even paid for it, and the new owner also looses out cos he no longer has a beetle either.....

When you borrow stocks, you have to provide collateral to the lender (maybe cash, maybe other shares). A lot of work is done each day checking that there is enough collateral (if the share price goes up, more collateral is needed). The collateral is returned when the stocks are returned. (If the collateral is cash, the lender has to pay interest, but now it's getting complicated!)

fimonkey wrote: »

So selling short, to the extent it forces a company to collapse.... who wins there??

Well if you borrow some Lehman shares, sell them for $20; and later buy back at $0.05, and return them, you've made a lot of money!

Regards