NEW YORK (CNNMoney) -- Regulators imposed a temporary short-selling ban in four European nations, effective Friday, in order to tame the wild market volatility that has taken markets throughout the world on a roller coaster ride.
The European Securities and Markets Authority, which is the European version of the Securities and Exchange Commission, said France, Italy, Spain and Belgium have all "decided to impose or extend existing short-selling bans in their respective countries."
"They have done so either to restrict the benefits that can be achieved from spreading false rumors or to achieve a regulatory level playing field, given the close interlinkage between some EU markets," the authority said in a statement.
Short selling occurs when brokers borrow shares and sell them with an expectation of making money on the shares' decline in value. France and Spain announced that their short-selling bans will last for 15 days, and could be extended, if deemed necessary.
European regulators ban short selling to calm volatility - Aug. 12, 2011
This is a pretty drastic step, even if it's just for 15 days. To me it indicates that Europe is very close to a full-scale financial meltdown (or at least its regulators think so). The prospect of that would be truly terrifying. If that happens it will be much worse than 2008...we could hold our nose and bail out failing banks, but no one has the money to bail out Spain and Italy.