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US Regulators step in to the short selling arena

While yesterday we covered a story which confirmed that the UK authorities are to outlaw short selling until January 2008 at the earliest, it seems that the US authorities are taking the same line with home markets. It has been confirmed that the SEC, the US regulatory body, has also outlawed short selling indefinitely. So why are the short sellers getting the blame?

Whether the authorities are making a big mistake by reducing the terms of the free market economy remains to be seen but short selling is not the reason why mortgage debts are climbing higher, why jobs are being lost and why some of the largest names in the world of finance are struggling. Fear and greed are the main culprits, the greed the banks showed when markets were flying and the fear they are now showing with regards to lending money to counterparts and the consumer.

Short selling does not help, it can create false markets and some traders have been known to spread false rumours to push a share price lower. But to blame everything on the short sellers is not only wrong it is very short sighted. It may catch the headlines and give the authorities a good name with the public, but it really is all smoke and mirrors.

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