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Thursday, August 28, 2008

Why didn't we think of that? 

Bloomberg reports:

Aug. 28 (Bloomberg) -- Pakistan set a floor for stock prices on the benchmark exchange, moving to halt a plunge that has wiped out $36.9 billion of market value since April.

Securities can trade within their daily limit of 5 percent ``but not below the floor-price level'' of yesterday's close, the exchange said on its Web site, without giving details.
I wouldn't be at all surprised if we hear FDIC Chairwoman Sheila Bair recommending this sort of thing for the US housing market. This is exactly the kind of "solution" she has been looking for.

(CWCID: Calculated Risk)

2 Comments:

By Anonymous Anonymous, at Thu Aug 28, 12:12:00 PM:

Is this not exactly the same thing that we have in our commodity markets?

Doesn't the NYSE have "disconnects" if stocks move more than a predetermined amount?

I don't like it but, who are we to call the kettle black in this instance?  

By Anonymous Anonymous, at Thu Aug 28, 01:11:00 PM:

Doesn't the NYSE have "disconnects" if stocks move more than a predetermined amount?

Yes, but it's not an actual price floor. NYSE rules don't prevent a general drop in the market like this rule does.  

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