It’s the shorts!

Oh yeah, this is sure to restore confidence in British financial stocks (emphasis added):

Britain bans short-selling of financial stocks

By Steve Goldstein
Last update: 1:52 p.m. EDT Sept. 18, 2008
LONDON (MarketWatch) — Britain’s Financial Services Authority on Thursday banned short-selling of financial stocks and prohibited any increase in new bearish positions in the sector. Also, disclosure will be required on all positions of more than 0.25% of a stock. The regulator said it may extend the bank to other sectors. The ban is due to remain in force until Jan. 16, but it will be reviewed in 30 days. “While we still regard short-selling as a legitimate investment technique in normal market conditions, the current extreme circumstances have given rise to disorderly markets. As a result, we have taken this decisive action, after careful consideration, to protect the fundamental integrity and quality of markets and to guard against further instability in the financial sector,” said Hector Sants, chief executive of the FSA.

Especially with news like this:

UK borrowing soars to £28.2bn

UK public finances deteriorated further in August as the public sector net borrowing requirement for the five months since April rose to £28.2bn, roughly 70 per cent higher than a year earlier.

Sharp rise in UK jobless claimants

The number of people claiming unemployment benefit rose by more than 32,500 to more than 900,000 last month, the seventh monthly rise and the biggest increase for almost 16 years.

Here’s chart of the FTSE 100 index over the last year: