The ban on the short-selling of financial stocks is typical of the type of short sighted stupidity and thinking we have come to expect from politicians over the past few years.
In 2008 we had the FSA do exactly the same thing as banking stocks in the UK came crashing lower. Despite the ban RBS and HBOS shares carried on their declines and ended up being bailed out. This time it appears that the FSA has learned its lesson by not participating.
These bans are misguided because it removes the ability for investors to hedge their physical shareholdings in the CFD or other markets against their physical portfolios.
They are then left with the only available option left open to them - physically sell their shareholdings, thus accelerating the declines.
Furthermore the implementation of a ban is a tacit admission by EU authorities that they have a problem that they can't deal with.
The EU authorities need to get real and get rid of this ridiculous short-selling ban and start to focus on the real problem behind the turmoil, which is the amount of toxic debt sitting on bank balance sheets, instead of trying to make political capital about nasty short sellers in the popular press.
In imposing this ban they have actually exposed the small investor to even greater risk by removing a mechanism that allows those who own physical stocks to hedge against share price falls so that they don't have to liquidate their shares.
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