The British government "shocked" the finance industry over there tonight when they announced a three month moratorium on short selling. Short sells are financial instruments that allow someone to bet against a stock by borrowing the stock (for a fee) for a price ostensibly based on its current price, selling the stock, and buying it back after it falls (hopefully), returning the stock to the lender and pocketing the difference. It's risky, but it allows stock prices to fall faster, and for a correction to happen, the market has to bottom out. It's just speeding up the inevitable, minimizing the amount of time that the markets fall before they start to rise again. Temporarily banning short selling has been discussed in America, too, though it hasn't happened yet.
The Guardian article also includes these disturbing bits, about the British government's plans to lean on lenders to give more mortgages to first-time buyers (i.e., less credit-worthy people):
Short-selling has inspired government action because ministers are relying on Lloyds TSB's purchase of HBOS to revive the housing market and has agreed to override competition laws in return for a pledge by the newly created megabank to offer more home loans to first-time buyers. [...]
When asked how the bank would counter abuse of its market dominance, particularly in mortgages, he said "new lending" by the combined bank for households and small businesses would "continue at least at current levels" and the bank would increase the range of products aimed at first-time buyers.
So basically, the government is going to ensure that risky loans continue to be made by state-controlled lenders (the same thing exacerbated/caused the subprime collapse over here, meanwhile ensuring that banks cannot contract their lending practices as is normal during a recession. Do they never learn?
Edit: On the other side of the Anglosphere, Australian politicians are also looking to further control their mortgage market, with the creation of an "Aussie Mac." Stephen Kirchner has an analysis of the plan, and finds that it has many of the problems that American mortgage GSEs have had. He admits it's an appealing idea, since the corporation (whether public or private) requires no federal expenditure, as it derives its superior market position from the government's credit rating, which allows it to borrow at lower rates than private banks could. But the savings are not reliably passed on to consumers – the corporation already has an inherently superior market position, so there's a lot of room to make profit without any competition). And even when the savings are passed on to consumers in the form of lower interest rates on home loans, the American real estate bubble that preceded and enabled the subprime meltdown shows that easier lending – and thereby higher housing prices – is not always such a good thing. And then there's the fact that in the end, if the government has to bail out the corporation (as the Feds just did), the costless way to raise homeownership rates ends up not being so costless.