From Paul Krugman’s blog >>>> The entire financial sector has just lost its shorts >>>
I just read Paul Krugman’s blog of 18 september, he makes some obscure reference to another crisis; “There have been hopeful comparisons to the financial rescue the Swedish government carried out in the early 1990s” etc. What do you all say about this? I’m just curious. Krugman: http://www.nytimes.com/2008/09/19/opinion/19krugman.html?_r=1&oref=slogin Reference, outlining the basics of the other crisis Krugman refers to: http://www.riksbank.com/pagefolders/34450/080313e.pdf
Not that bad as volatility and the uncertainty it creates have to be reduced somehow. Some hedge funds however may not be that happy with the news.
Banning short selling was a bad idea. What’s gonna happen when the ban is lifted? My guess is that there will be a flood of short selling which will drive down prices sharply (particularly in the f/s/ sector). Look what happened to Lehman. Ban lifted in Aug., company out of business in Sept.
considering the fed’s rescue plan, I don’t see why this would happen.