Wasn't trying to be confrontational, just think that the suggestion that markets are functioning and will function correctly is incorrect. See my comments below:
Regarding the floor under the market: Which would produce a larger downdraft?
a) Many redemptions from funds due to a loss in confidence in the underlying soundness of the system?
or
b) Gov't intervention in the rules by which the game is played?
So,,, we must both agree that when the rules are made up as we go, it doesn't inspire much confidence...no?
Regarding floor to the market, short sellers provide a cushion in securities that have real value because, in theory, people will cover when the stock is fairly valued, which is different than say, selling because you can't afford a loss. One is panic, the other is profiteering. In a panic, there is nobody willing to buy. This cannot be achieved with options, because they are tracking the underlying, which may not be fairly valued in a panic. That is probably the most singular reason I have for supporting short sales. It still boils down to liquidity.
The ethics of shorting may as well be discussed along with the ethics of business and loaning money for that matter.
What is the value of LEH? Zero, zip, nada. NOBODY would buy it. LEH stock is worthless paper. It is so worthless, even LEH agreed they couldn't get a loaf of bread for it. Nonetheless that assets of the company have value and so does the business.
The whole stock market game is greater fool theory and has nothing to do with business, it has to do with confidence in the business. If LEH could sell more paper to raise cash they would have. Thus order and confidence in the market IS the market. E.g. If I can't get paid for my trade, I won't trade--no market. That simple.
MS? One can argue that they were under assault. What's the difference between that and hostile takeover? Naked shorting is illegal. Whether or not it is enforceable is irrelevant, loaning money to people who can't pay it back to pad your balance sheet is also illegal. I have already told you, I don't agree with selling more shares than are available to trade. You can't sell what doesn't exist(unless you're the fed).
I happen to come down on the side of letting the market value these things for what they are worth, rather than changing the rules trying to avert fair value, which may or may not be zero.
I also happen to think these people who pulled this crap should be locked away, and those assisting or in their employ should get what is comming to them. The bailout is probably keeping me in a job, but it's also paying CEO's 20 million for theft.
So,,, sorry to appear confrontational...perhaps just terse. At any rate, please accept my apology for the apparent snipe. ;-)
Cheers,
V |
