Short Selling

let me explain a problem with the banning of short selling with borrowed stock.

Now an investment bank has a holding in a bank, for the pension funds it manages. Now, it wants to buy some more shares but actually thinks that the price is too high, remember we are talking pensions funds which cannot trade.

So, le's say it knows of a hedge fund which wants to short the stock, would anybody disagree with the investment bank lending the stock it actually wants to buy to the hedge fund so that they then sell the stock and the price falls.

The investment bank can then go into the market and purchase the shares at a price it thinks is beneficial. The short seller has drawn out the real sellers.

The investment bank is then happy because it has acquired the shares at a realistic price, the sellers have got out, and the hedge fund is happy because it has covered it position. The price then rises back to its previous valuation. Is anybody unhappy, only the real seller!

They were so wrong to ban short selling, it kept everythinh moving, now everybody is a seller because of the effective nationalisation of the banks, where do the shareholders get their compensation, they don't unless they sell now!