Bailout

Adventures in market reporting, short-selling edition

By Felix Salmon

Everybody knows what happens to stocks when you try to ban short sales, right?

LONDON, May 20 (Reuters) – European shares were sharply lower at midday on Thursday, extending the previous session’s steep fall, on persistent concern other euro zone countries will follow Germany in banning short selling in certain instruments.

Except that’s not exactly what happened in September 2008:

LONDON, Sept 19 (Reuters) – European shares soared in afternoon trade on Friday, driven by a temporary ban on short sales of financial stocks in the United States and Britain.

So, if you ban short-selling, then stocks go down. Or else they might go up. Glad that’s cleared up.

Full post as published by Macroprudential on May 20, 2010 (boomark / email).