Could the share shorting ban be causing volatility?
Is the ban on short-selling shares working? No-one can say, so let’s set up an experiment that allows hedge funds to deal in half the stocks while the rest remain protected.
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The Edge
Richard Northedge takes on corporate finance
Archive for the ‘Markets’ category
Darling’s bail-out looks like capital but is a loan
The state bank bail-out is not nationalisation after all. The £50bn of preference shares the government is offering to buy looks like capital but, as any finance director knows, is really a loan. It protects the taxpayers’ money but there will be no windfall if banks’ fortunes soar again.
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Borrowers rescue plan dangerous
Governments think if they help the few borrowers unable to pay their bills they will help relieve the banking crisis. What they’ll do is encourage lots more to default and thus make the crisis worse.
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Interest rates will fall so get on and do it now
It won’t help much but it won’t do much harm either, so if people want an interest rate cut, go on - let them have it.
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How should the banks thank taxpayers for their help?
When the fire-fighting is finished and the rescue completed, there are serious questions for what remain of the world’s banks. Capitalist countries must ask whether banks can again be trusted.
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Short sellers are just scapegoats
Short-sellers join a long line of financial scapegoats – hedge-funds, private-equity, speculators, share rampers, insider-dealers and the mysterious Gnomes of Zurich – but they are no more guilty than any pension fund that sells shares to avoid a fall.
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Lloyds will discover HBoS’s hidden US problem
The question was not whether HBoS was too big to fail but whether it might be too big to save? The problem is not its exposure to the UK housing market but its exposure to US mortgages. Lloyds TSB must avoid being contaminated by HBoS’s problems.
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$100 oil offset by falling pound
Good news: oil has fallen below $100 again. Bad news: the pound is down as well, meaning much of the gain on fuel costs will be missed by UK manufacturers.
Housing scheme is a risk to taxpayers
The banks got into trouble with 100 per cent mortgages, so why does the government see such loans as the solution? Lenders can’t take an equity stake in homes that have no equity.
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Northern Rock’s price hasn’t risen by £3.4bn
When the state eventually sells Northern Rock it must now recover an extra £3.4bn thanks to the debt-for-equity swap. As it was worth little more than that at its most inflated price before the collapse, that is surely unlikely.
