May 25, 2009
The issue is the asymmetrical relationship pf Capital Transactions:
- Buy low and sell high
- Sell high, and then repurchase low.
The issue is not the immorality of selling securities (i.e., over valued) in anticipation of repurchase (i.e., at lower prices).
The issue is: Does Short Selling become a self-fulfilling prophecy, driving the shares lower.
If the Federal Reserve can regulate Margin Requirements in terms of: (a) the minimum valuation of marginable securities, (b) Margin Allowances (i.e., the amount of pledged capital), and (c) the Regulation T Requirements (i.e., the Rate of Interest) then why can not the SEC create mathematical limitations of the AVAILABILITY OF SHORT SECURITIES, thus creating a limitation against excessive Short Sales?