I certainly don’t advocate such a thing, but it’s a thought that had me wondering this morning: what effects would arise from the government just shutting down trading on the NYSE and NASDAQ? Would the stocks, bonds, etc. hold their value indefinitely, or would they immediately become worthless? What effect would it have generally on the US and/or worldwide economy?
If you mean that the US Govt. (presumably through some of invocation of martial law?) shut down trading at the places where the NYSE and NASDAQ normally operate, there would be strong motivation to set up similar operations elsewhere.
If instead you mean that trading in the securities listed on those exchanges is outlawed, then they would indeed be worthless. (What would a $20 bill be worth if you could be sent to jail for offering or accepting one?) This would certainly have a catastrophic effect on the US (and world) economy.
Yeah, I meant the latter, thanks. Would it make any difference if the shut-down was for a temporary and specified period of time - let’s say a month - as opposed to a general open-ended one? My WAG is that the securities would retain some value during a temporary shut-down, since they’d be tradeable later, but that the loss of immediate liquidity would lessen the value considerably.
The stock market was closed for Sept 12-14, 2001. When they reopened, I believe they took a nose dive.
It’s not unprecedented…Russia suspended trading earlier this year, and I think the NYSE has safeguards in place to suspend trading if the market loses a certain percentage of its value in a certain time period.
It’s hard to say what something is worth when no one is allowed to buy or sell it. Of couse, making trading illegal doesn’t necessarily stop it (c.f. various drugs).
But at the end of the trading ban things would return to normal, where folks value securities based on the usual host of factors. In some sense, a trading “ban” happens every weekend, without much strife - which argues that short interruptions are no big deal.
If the ban were permanent, the trade would move off-shore. Places like London and Tokyo would be really happy to take up the business, and I don’t see how the US Government can stop people in the US trading on those exchanges.
Thanks for the responses, everyone. I had completely forgotten about the suspension of trading after 9/11 and didn’t know that Russia had ever suspended trading. Interesting stuff. Thanks again.