Subject 34482
Rick, you asked what 'dehypothecate' means. It means you move your shares to a cash account, which means anyone who borrowed those shares has to give them back. Which means that shorts who sold them have to cover. Which means they buy stock on the open market which they would otherwise not buy. Which means the share price goes up because they have to bid higher than competing buyers. Which means that people breathe a sigh of relief as their shares rise in value and they can continue enjoying the wealth effect.
I thought it would be helpful if the GGMDM was extended to Q! and indeed, the whole Nasdaq. So if everyone around the world who has shares in a Nasdaq listing was to move their stock to a cash account, the big reduction in credit expansion which Alan Green$pan has been jawboning and actually doing my manipulating share prices down by manipulating interest rates up, would come to pass, [if this sentence is not too long to follow]. That would mean a big reduction in margined stock, which the USA government has been concerned about. A big reduction in credit, which the USA government has been concerned about. The higher interest rates would be able to come down. And share prices would stop falling and go up quite a bit, but probably not enough to cause a sudden 'wealth effect'.
The 'poverty effect' is probably a bit more worrying to many people than the 'wealth effect'. The poverty effect is much more dangerous than the wealth effect because it is the 'black hole' effect into which existence disappears, never to return, whereas the wealth effect is akin to the inflationary expansion of the universe which has brought us the wonderful cornucopia of existence that we see around us.
Yes, that sounds about right!
Meanwhile, how come the huge buy-in of Q!? Hordes of people are buying for some reason and demand for stock is huge. Today there were 40 million shares traded [ignoring the usual double-counting business] which is the third biggest volume ever after the wild New Year's Eve celebrations at the spike and the post-celebration blues at the end of January. Buyers are all over Q!
Buy the way, I just had a call from somebody on the Sunshine Coast in Australia, who has been enjoying the wealth effect in a half year long holiday around the world on the profits of Q! [paper profits it turned out]. He is impecunious now. He has had enough fun! His knuckles went white some time ago and it appears the roller coaster is going so fast downhill and swooping around corners that people are being flung off.
Nevertheless, he was laughing and the beautiful sun was rising on another wonderful day.
Life's a giggle [as my mother-in-law says and long may she say it - aged 82].
Anyway, I've had enough fun now, my knuckles are white and I feel queasy, so dehypothecate away.
Mqurice |
