I am not an economist. I have a good sense of math and a doctoral degree, but not in economics.
So, feel free to say what I'm saying makes no sense; but if you do, please explain why this is a good idea.
jump...
This is what I just saw on Bloomberg:
The U.S. Securities and Exchange Commission's ban on short-selling of financial stocks will end next week, following the government's approval of a $700 billion financial industry rescue package.
The prohibition on betting on a decline in share prices will expire Oct. 8, the SEC said in a statement today. The SEC said it imposed the ban to calm markets and give Congress and the White House time to adopt legislation that lets the Treasury purchase illiquid assets that are burdening banks.
Here's the link
Why does the SEC want to do this? If people think the market is going to continue to do poorly, as everyone in the MSM has been saying all day, and as supported by the market today reacting to job numbers, then the people who make money in options will "short sell" - which will make them money, but push the market down further.
I thought the 700 billion dollars was to protect not only, "liquidity, but people's 401Ks."
So, why so soon? Aren't we still concerned about the instability and volatility? Are we afraid if we don't let short selling start again something radically bad will happen on "Main street?"
Or, are we worried something will happen to options traders, who make their living short selling?
Please tell me there is another answer.