Friday, September 26, 2008

Sailing Dire Straits

Cost-free solutions to the financial crisis... did they look for these first?

1) Tax the sale of stock. Britain does this. Double the tax for short sales. Use this tax revenue to pay for market problems.

2) Install the "stock thermostat" described in the post below. This simple rule turns off short selling when a stock has more than 80 percent of its shares shorted, then turns it back on again as soon as only 30 percent of the shares are shorted. All it requires is that a daily tally of short sales be sent to the SEC. It will remove fluffiness at the top and uncertainty at the bottom. Corporations should be able to ask for this protection. It does not set prices.

3) Your guess....

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