..The short-selling announcement in Europe stirred some immediate criticism. "It is a crisis of confidence, and when you do something like this, it shows a lack of confidence, which is exactly the opposite of what you want to say to the markets," said Robert Sloan, managing partner of S3 Partners, a firm that helps hedge funds manage their relationships with their brokers.
Back in 2008, European and United States officials coordinated temporary bans on shorting financial stocks.
The bans in Europe are drawing to the list of comparisons that commentators are making between the current market unrest and the financial crisis of 2008.
Back then, governments around the world, including Britain and the United States, banned short-selling on financial stocks temporarily. The ban was meant to prevent bank stocks from falling further, but in time, stocks fell anyway.
Hedge funds, in particular, were hurt by the ban because it interfered with trading strategies that pair negative bets with positive ones.
The ban on short-selling in 2008 has been widely criticized and blamed for driving investors out of the market altogether, further hurting stock prices...
Any ban on free market trading inevitably has negative impacts which end up hurting those who it was designed to protect. Read the complete article and make up your own mind.
