The SEC has gone mad with power. Remember when Americans could point to China and Russia and mock their forms of government controlled “capitalism”? By the time Christopher Cox is done with his remaking of the SEC over in Karl Marx’s vision, America will most likely have a financial system of contradictions that not even the top socialists could have dreamed up. Apparently this is all to “save” us. Here is a tip to all the desk jockies at the SEC in Washington DC: if the market wants to go down no amount of engineering by you will stop it. In fact, these types of actions could very well accelerate a push down.
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July 25th, 2008 at 12:01 pm
OK, I have no problem with introducing some kind of legislation to make the transparency of short positions the same as long positions, but why restrict it? If you invent engineering concoctions you just warp the markets which introduces inefficiencies. If you have a list of companies that cannot be shorted, which means the short interest will concentrate on those not on the list giving those on the list an unfair advantage in the fight for survival. Same if they set the bar at ‘any financial institution over $750 million or more than 5% short interest’ - so you have another company that is in a similar state but in a different industry is now going to attract the short interest….that is until their lobbyists hit congress and get the same treatment or they throw the dice and take out a huge legal action costing everyone a huge amount of time and money, not really a very efficient use of capital now is it?
Quite simply shorts and longs should be looked at in the same way - what applies to one should apply to the other and to everyone equally. If you make it as frictionless as possible then you will, in the long run, have a system that is as efficient as possible at reallocating capital.