Friday, 12 August 2011

Osborne should act now!

Whilst four EU countries ban short selling of banking stock to bring some sort of stability to the markets but sadly the UK is not one of them. We should welcome this decisive policy change by France, Italy, Spain and Belgium.

Unfortunately George Osborne doesn't seem to have learnt the lessons of 2008, when short selling was partly responsible for the demise of RBS, Barclays and Lloyds TSB and which subsequently led to the massive taxpayer funded bailout.

George Osborne should act now to ban short selling and to protect companies and jobs from further exploitation by unscrupulous hedge fund managers who are acting against the public interest.

10 comments:

John Broughton said...

The converse of short selling is buying long. The latter happens on a daily basis. Banning short selling distorts markets.

Banning short selling is also an expression of fear which markets "smell." Experience has shown that banning shorting exacerbates the overall effect:-

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1645847

So banning shorting is more likely to destroy jobs and investment.

Plaid Gwersyllt said...

So why did we ban short selling at the time when hedge fund managers destroyed Bradford & Bingley and nearly destroyed RBS etc in 2008.
You are however in good company John even Robert Peston seems to doubt the benefit of a ban on short selling http://www.bbc.co.uk/news/business-14502291 but I would like to reserve judgement and see what the ECB etc has to say.

Anonymous said...

More populist, economic illiterate clap-trap from Plaid.

http://www.economist.com/blogs/freeexchange/2010/12/financial_markets

"We should welcome this decisive policy change by France, Italy, Spain and Belgium. "

Welcome incompetent politicians who have created a single currency without properly ensuring that all countries had properly met the entry criteria, now watching it predictably fall apart, trying to blame the markets in order to disguise their mistakes?

No thank you.

I suggest you refrain from posting on economic matters in the future as your lack of knowledge is painful.

John Broughton said...

@ Plaid Gwersyllt

"So why did we ban short selling at the time when hedge fund managers destroyed Bradford & Bingley and nearly destroyed RBS etc in 2008."

Short selling had nothing to do with the problems of B&B and RBS. Incompetent management at the companies plus an incompetent government. A deadly combination.

Keeping company with Peston, now that does worry me!

Old tankie said...

Yes this does show up the lack of financial nous you find in Plaid and which makes people who long for an independent Wales despair of it ever being achieved.

There is so much wrong with modern day capitalism - the pension funds and unit trust funds encouraged by successive governments who are basically thieves stealing the money of savers with their fees and share churning.

You have the banks who were bailed out when they should have been allowed to fail - the long term pain the bail out will cause will be far more than the short term pain.

You have the tax-payers of countries like Ireland condemned to a generation of poverty in order to prop-up the mad economic fixations of a European elite.

If short sellers get it wrong they lose money, they are not the bad guys.

Anonymous said...

There are more than one economic theory in the world and the one you right wing anti European Tory nutters promote is thoroughly discredited and its time to try something else. There are 2 sides to every story.

Plaid Gwersyllt said...

Tories don't like my view on economics and the financial markets, I must be getting something right then!

John Broughton said...

Sadly Arfon you demonstrate a total lack of understanding of markets and economics. Plaid's contribution to One Wales was testimony of the party's financial incompetence.

Plaid Gwersyllt said...

The One Wales Govt had no tools to influence markets etc, so how can you be incompetent to do something when you have no power. The only thing that the One Wales Govt could do was spend the budget to create jobs, which we did...PROact and REact programmes which were ack UK wide as successfull. Even though you are a right wing libertarian you seem to criticise us for governmental non intervention. You need to decide what you expect from a Welsh Government that has no economic powers such as setting rates of taxation i.e. Corporation Tax which would make a difference.

John Broughton said...

One Wales - Plaid held the economy brief through the hands of IWJ and it is a matter of common consent that he was inept and ineffective. Private industry was abandoned with results that are evident to all.

WAG had a budget to spend and made the wrong choices - hence decline on all fronts.

Intervention was not and is not needed. Some support schemes and grant aid did help the private sector.

Most analysis of government intervention demonstrates it to utterly pointless.