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News Link • Economy - Economics USA

Mish: Short Selling Restrictions "Indicator of Imminent Market Crashes"

• GlobalEconomicAnalysis.blogspot.com
 
"Short selling restrictions are a great indicator of imminent market crashes. The biggest market declines in history all happened shortly after short selling restrictions were introduced." Flashback Friday, July 18, 2008: Short Squeeze In Financials Continues Fannie Mae is up another 25% today to $13.66 in the wake of Selective Enforcement of Regulation SHO and Bernanke's statement: "It's important for Fannie Mae and Freddie Mac bonds and stocks to rise so they can keep raising capital and aid the mortgage market." This move in financials is going to fail spectacularly once the panic buying ends, but for now the bulls are having a bit of fun. Wow. I forgot that utterly stupid comment by Bernanke "It's important for Fannie Mae and Freddie Mac bonds and stocks to rise so they can keep raising capital and aid the mortgage market." Fannie Mae never did raise any more capital. That short squeeze was the beginning of a violent end. Taxpayers have now bailed out Fannie Mae and Freddie Mac to the tune of $127 billion dollars. Recently Congress upped the taxpayer liability to infinity. Taxpayers are now on the hook for every penny of future losses. How well did those short selling curbs work? History will be the judge.

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