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Microcap & Penny Stocks : Naked Shorting-Hedge Fund & Market Maker manipulation?
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To: makeuwonder who wrote (3887)10/5/2008 11:33:23 AM
From: Hawkmoon   of 5034
 
So back to what I was asking. Do you think most of the money they made naked shorting was used for faulty loans?

Possibly..

But there was more than sufficient cash available to sustain these lending practices due to Asians and Europeans keeping their cash in the US to avoid repatriating their profits back home (which would have destabilized their favorable currency exchange).

But there are so many hedge funds that it's quite likely that quite a few of them were involved. But let's face it, the only ones that matter now are the ones who really piled on their shorts against the US financials since 2007 (when M2M accounting for Mortgage related paper was enforced).

Also, with regard to the issue of illegal aliens buying homes, I would agree that maybe they shouldn't have been permitted to do so, but that was state regulated so there are 50 points of failure. However, from my interaction with some mortgage bankers who were involved in that market, my understanding is they were some of the best risks because they always made their mortgage payments (often in cash.. ;0)
For them, America represented the first opportunity they'd ever had to own a home.

And for them, face the facts.. they took a chance on an investment that they could always walk away from untarnished and return back to their country. Afterall.. if they merely paid rent, it was money down the drain. But owning the house gave them a chance for upside valuation.

And this additional demand by them for homes did nothing to depreciate the value of other people's home, especially as real interest rates remained so low.

Hawk
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