Fed’s Final Roll of the Dice
First came the ban on naked shorting yesterday, swiftly followed today by a total ban on shorting of all 799 financial stocks. Of course this is all just temporary and begs the question – what is going to be different about world markets when the bans are lifted?
The Treasury believe they have the long term answer to crippled credit markets; rolling up all troubled debt instruments and removing them from Wall St’s collective balance sheet. This will cost says Paulson, “hundreds of billions of dollars”. To arrange this they are going to need time. This is the reason for the market manipulation they are engaging in, something which is far more cavalier than the legitimate strategies adopted by short sellers that has come in for criticism from the mob. The Fed know this temp ban on shorting will do nothing in the long run; shorters merely wait for their prey to come out into the woods again, as the previous summertime short sale ban proved. The decree “will last no longer than 30 days”.
The clock is ticking.