n-Financial Wars: Ban Short Selling and Guess What Happens?

1. On Thursday, August 11, 2011, the government authorities of France, Belgium, Itay and Spain announced a short selling ban. See: http://www.ft.com/cms/s/0/9a55839a-c42d-11e0-ad9a-00144feabdc0.html#axzz1UjiDK0Zt

2. Just how smart is that? Zerohedge provides a succinct price comparison to the US short selling ban of Sep 19, 2008:

The short selling ban led to a 48% drop in less than a month.
Source: http://www.zerohedge.com/news/here-what-happened-when-sec-banned-shorting-financial-companies-2008

3. Anyone writing a short thesis on short selling (triple alliteration intended) must read the most Quack-Filled regulatory letter that rivals the pure shoot-myself-in-the-foot regulations of Sarbanes-Oxley and Dodd-Frank, called the "SEC Short Selling Ban" of September 19, 2008. See: http://www.sec.gov/news/press/2008/2008-211.htm

4. An important analysis of this ban that politely demolished the pro-ban arguments was conducted by the US SEC itself (!) (Dec 16, 2008) which stated that "our results ...are inconsistent with the notion that, on a regular basis, episodes of extreme negative returns are the result of short selling." See, http://www.sec.gov/comments/s7-08-09/s70809-369.pdf.

5. The outcome of (3) and (4) above is the SEC Short Sale Circuit Breaker Rule, see: http://www.sec.gov/rules/final/2010/34-61595.pdf, adopted Feb 26, 2010, which at 334 pages is a bargain and unlikely to have been read by anyone.