Kasz216 said:
No it doesn't. I just said that it doesn't effect market volitility. Scientific studies on countries with short selling bans shows that it's had zero effect on stock prices.
As for banks If they would of stopped lending argentina money it would of stopped the "vicious cycle" by bottoming out Argentina sooner when argentina immediatly defaulted on thier debts. What's the possible solution? It's to keep selling your bonds at higher interest rates, because people and banks rightfully no longesr trust you, while massivly cutting the deficit by cutting into any programs that you can cut, and filling the rest of the gap with tax raises... and to stop being so irresponsible in the future. |
I totally agree that irresponsible states must put again their balance under control. I'd like, though, that this were made without playing into speculators' hands. As, at least in the Italian case, the state spends a huge part of its revenue to support itself, its huge costs, including public administration workers' wages, and those of ministers and members of parliament too, couldn't it be a good idea to partially pay their wages beyond the lowest income classes with bonds emitted at lower interest than what investors now pretend, at the same time reducing the number of bonds emitted at higher interest rate? It would at the same time contribute to defuse the vicious upward spiral, and it would put a larger part of the debt in the citizens' hands.
About shortselling bans: I know there are studies that conclude that way, but in a global market, how could a local ban on shortselling work? Bonds could be shortselled anyway in countries where it's permitted, so that studies are flawed, or maybe not, they are just read in a different way from what they actually mean: they just prove bans don't work, but they DON'T prove shortselling doesn't add further damage.
