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A slight contrast

Meanwhile, China legalises short selling:

China’s action contrasts with regulators in the U.S., Europe and Australia that have banned short selling in the past week to shore up financial shares battered by the global credit squeeze. China’s government is betting the changes will boost trading without spurring further declines after state share buybacks helped the CSI 300 Index rebound from a two-year low.

That is partly it. But mostly what China’s government seems to me to have been doing for many years now is tackling every domestic economic problem it has with a free market solution, and betting that even if such measures do not solve the immediate problem, they help in the longer run.

Via here and here.

5 comments to A slight contrast

  • The idiocy in blaming the short-sellers can hardly be overstated, of course. None of this is their fault, and banning short selling is a combination of shooting the messenger and rigging the markets. Both incredibly dumb things to do.

    There is an opportunity of course. America’s financial markets are accepting this bailout, and in return they will be getting a huge amount of regulation. The net effect is that they will be rendered pretty much completely useless. The trading that takes place in the US (even on US assets) won’t cease, but it will go to other jurisdictions. Countries that have the infrastructure and governments that understand that they should simply get out of the way and let financial institutions trade have a lot to gain. I would be incredibly bullish on Singapore, for one thing. In many ways it is a very illiberal place, but its govermment understands markets better than most, and they do this kind of thing for these sorts of reasons already. Where are the major trading volumes in Nikkei futures and other derivatives on the Japanese markets? Singapore.

    A top income tax rate of 20% and no taxation of foreign income is nice, too. And the food is very fine.

  • The Wobbly Guy

    There’s good and bad. No matter how prosperous or free market we(Singapore) are, it doesn’t help much if the rest of the world is unable to take advantage of our systems, our markets and our products, either because they’re too poor, or restricted by legislation in their own countries. I’m actually beginning to think the latter could very well become possible at some point.

    Don’t ask me how it could be done, though I’m sure the bureaucrats will figure out something.


  • Alexandros

    It’s sad to say, but after witnessing the performance of the U.S. government over the past few weeks (on the part of all branches) I’ve come to think that the Chinese simply have more sensible people in positions of power. Oh sure, the mid-level bureaucracy is quite corrupt, but then again so is ours, just not to the same extent. But in the United States at least, with this atmosphere of continual campaigning preventing any deliberative actions…well there’s almost something to be said for an authoritarian (or at least non-representative) governing system. If China ends up overtaking the West in the coming decades it will because it has enough people contemplating what’s over the horizon, as opposed to the acute myopia that seems to have completely paralyzed the West. The financial crisis is just one of many things that should be handled by people who are actually involved in the field and are experts at that, and not lawyers and their political mouthpieces looking to get their name in a headline as the “Savior of the economy”. Sorry for the polemics I just find myself thinking that America would be better off without Congress even existing. Also sorry, I realize this is a British site…but this affects you as much as us.

  • Sunfish

    Alexandros: The smart guys who knew finance got us into this mess. We need people who are able to balance a checkbook but aren’t smart enough to bundle good mortgages with bad and sell off the package, and who aren’t smart enough to think that buying same is a good idea.

    As for abolishing Congress…that’s 538 members who be in other sectors. And in the private and local-government sectors, Congressment are commonly known as “That Guy.” Mine, for instance, is exactly the type of guy who would take the last whole cup of coffee and leave 1/4″ in the pot, without rinsing it out or turning off the burner plate.[1]

    And “That Guy” flags people at the range, loses other people’s car keys, and will stay down on a cold theft report (taken in a McDonald’s parking lot, usually) when the rest of the shift is in backlog.

    For the love of all that is holy and good keep “That Guy” in DC and away from the rest of us.

    [1] And with such disrespect to coffee I can practically hear Midwesterner tearing apart his coat closet looking for a sword or a bullwhip.

  • Alexandros: after the US has been through what China has, American politicians might become just as smart. Do you really want them to take us through such a learning experience? On the bright side, I promise it will take 60 years tops.