Saturday, July 11, 2015

China Copies USA: Bans Shortselling

Taking a page from the book of the regulatorily-captured SEC, China banned shortselling as soon as the legitimate bets began to pay off.   Christopher Cox as head of the SEC did the exact same thing when bankers experienced a wee bit of inconvenience for their crimes in 2008.

Of course in China today the reason is exactly the reason given by the hegemon in 2008: to protect the investors and the markets, when in fact it was just to effect theft from small investors, the whole point of banking in USA.

There is a criminal form of shortselling, naked shortselling, which is allowed in USA, naturally, otherwise.  Naked shortsellers have no skin in the game, so a ban to them is "nothing ventured, nothing gained."

Shortselling is the only effective way to regulate securities markets, and banning shortselling is in effect eliminating fraud enforcement, reducing it to the mere theatre provided by the regulatory-captured SEC, etc.

Those who actually understand the market and play fair exit the rigged game and it is left to those who don't understand it, people who invest, and those who do, the front runners and government licensed "market makers."

Hong Kong turned down Alibaba IPO, because they have a legit market.  But USA citizens are effectively not allowed to invest there, by USA rules.

Funny place, USA.

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