Don’t want no short-sellers round here!

The outcry against and restrictions on short-selling of financials stocks were unjustified and ill-advised and will have a deleterious impact.

It is clear from the credit crisis that shorting is one of the many things that governments and regulators do not understand about financial markets. In September, the US SEC, the UK’s Financial Services Authority and several other regulators banned shorting of financial stocksin an attempt to stop the stock markets from deteriorating further and to help protect the capital of financial firms.

Several weeks on, stock markets are still volatile, and the stock prices of financial firms are still falling.

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