I'm seriously wondering what's next. Is the government going to start encouraging banks to cook the books so to speak to save the economy? I'm just wondering if Gov will start hinting that "we won't be examining your books as closely as before, just make the problem gradually go away and don't make it so obvious that you're cooking the book".
Desperate times calls for desperate measures. And if you think about this, although Fannie/Freddie are trashed, the point I'm trying to make is that for a gov to come in and basically try to regulate their respective security by limiting shorting and "preventing" erosion further to me is alarming. It's not a level playing field and free market now is it?
I think SEC limit on Naked Shorting is good for stability in these uncertain times. Remember, they are not stopping regular (i.e. covered or borrowed) shorting; only highly speculative uncovered shorting that can destabilize the system by setting up negative feedback loops.
As for the Rioting in L.A., it is so ridiculous. You would think such things happen in a 3rd world country. How anyone with reasonable intelligence wouldn't know how to do a bank transfer on internet puzzles me. Also, the media have been shouting about IndyMac's threadbare finances for at least a few weeks. Why did the more loaded depositors not transfer funds earlier? Overall, a poor portrayal of citizenry.
I think SEC limit on Naked Shorting is good for stability in these uncertain times. Remember, they are not stopping regular (i.e. covered or borrowed) shorting; only highly speculative uncovered shorting that can destabilize the system by setting up negative feedback loops.
So explain how this is different from speculative buying destabilizing the market by creating a positive feedback loop?
I think SEC limit on Naked Shorting is good for stability in these uncertain times. Remember, they are not stopping regular (i.e. covered or borrowed) shorting; only highly speculative uncovered shorting that can destabilize the system by setting up negative feedback loops.
It really doesn't create a 'negative feedback loop', but it does allow the naked shorter the equivalent of increasing the money supply since the naked short (if institutional) is effectively creating a 0% loan. On the other hand, if the stock being shorted is paying dividends, being a naked short will not help because you will still have to cover the dividends for the shares shorted.
What naked shorts really provide, is a potential for a very violent upswing if the company or its officers understand how to deal with it and if the company is viable. If the company is not viable, blocking naked shorts will not help the company's survival.
for a discussion on naked shorting and its consequence - Failure to deliver. It is like you have a machine or circuit and suddenly the laws of conservation (of energy, matter, current etc.,) were repealed. Obviously, the engine or circuit may blow up due to accumulation at sink (or deficit at source).
Isn't putting so many banks on such a list create a "moral hazard" of sorts? "You can't naked short this" implies it is weak and hence attract covered short from speculators? Sort of affirmative action for banks.
Isn't putting so many banks on such a list create a "moral hazard" of sorts? "You can't naked short this" implies it is weak and hence attract covered short from speculators? Sort of affirmative action for banks.
This is why I'm voting for the Democrats in November. It's time to get back to the smaller government and conservative principles of the Clinton years instead of the socialist, corporate-welfare state that is currently being pushed on us by the current Republican administration.
Breeze. Would you please shut the fvck up on turning everything into politics in post about the democrat righteousness and pious POS prius owning "environmentalist" that you claim to be? You're like my ex-fat-fvck-lazy coworker at my previous company that thinks everything the democrats do is good, and everything the republicans do is bad, and yet his perpetual complaint one's own life, which was was pretty much his own doing.Dumbass things like spending nearly $50k in DVD collections with no savings, no planning, whine whine whine about not being able to afford a home, and sorry excuse for a tech worker who couldn't get sh1t done yet complains how he work gets outsourced and how he can't find a better position, and expects a welfare check in the mail for being "special". If that's what democrats represent, god help us.
Submitted by asianautica on July 16, 2008 - 8:22am.
TheBreeze wrote:
This is why I'm voting for the Democrats in November. It's time to get back to the smaller government and conservative principles of the Clinton years instead of the socialist, corporate-welfare state that is currently being pushed on us by the current Republican administration.
Haha, that's the first time I ever heard anyone say Democrats are for smaller government and conservative principles and Republicans are for socialist, corporate-welfare state.
Haha, that's the first time I ever heard anyone say Democrats are for smaller government and conservative principles and Republicans are for socialist, corporate-welfare state.
I'm one of those rare individuals who isn't afraid to speak the truth.
for a discussion on naked shorting and its consequence - Failure to deliver. It is like you have a machine or circuit and suddenly the laws of conservation (of energy, matter, current etc.,) were repealed. Obviously, the engine or circuit may blow up due to accumulation at sink (or deficit at source).
Actually, the consequences on failure to deliver are not as bad as made out in the article. There are two big problems though with naked shorting.
1) Voting rights. Shares from a naked short have no voting rights.
2) Making sure that the naked short can financially cover their position and any dividends that the stock declares.
Personally, as an investor, I don't care if the stock I buy is from a naked short unless I want to make sure I have a right to vote for board of directors etc (not that they pay much attention to the stockholders anymore - something that I think should change). Just so long as when I sell, I get the delta between purchase and sale. Dividends are what really hurt naked shorts, and having them around may reduce the speculative prices in many stocks -- grounding the price of the share back to basics, what the company earns and can pay in terms of dividends.
I'm seriously wondering what's next. Is the government going to start encouraging banks to cook the books so to speak to save the economy? I'm just wondering if Gov will start hinting that "we won't be examining your books as closely as before, just make the problem gradually go away and don't make it so obvious that you're cooking the book".
Desperate times calls for desperate measures. And if you think about this, although Fannie/Freddie are trashed, the point I'm trying to make is that for a gov to come in and basically try to regulate their respective security by limiting shorting and "preventing" erosion further to me is alarming. It's not a level playing field and free market now is it?
Apparently companies have been cooking there books for a long time. But there is so much cooking you can do until real cash runs out.
I think SEC limit on Naked Shorting is good for stability in these uncertain times. Remember, they are not stopping regular (i.e. covered or borrowed) shorting; only highly speculative uncovered shorting that can destabilize the system by setting up negative feedback loops.
As for the Rioting in L.A., it is so ridiculous. You would think such things happen in a 3rd world country. How anyone with reasonable intelligence wouldn't know how to do a bank transfer on internet puzzles me. Also, the media have been shouting about IndyMac's threadbare finances for at least a few weeks. Why did the more loaded depositors not transfer funds earlier? Overall, a poor portrayal of citizenry.
So explain how this is different from speculative buying destabilizing the market by creating a positive feedback loop?
I think SEC limit on Naked Shorting is good for stability in these uncertain times. Remember, they are not stopping regular (i.e. covered or borrowed) shorting; only highly speculative uncovered shorting that can destabilize the system by setting up negative feedback loops.
It really doesn't create a 'negative feedback loop', but it does allow the naked shorter the equivalent of increasing the money supply since the naked short (if institutional) is effectively creating a 0% loan. On the other hand, if the stock being shorted is paying dividends, being a naked short will not help because you will still have to cover the dividends for the shares shorted.
What naked shorts really provide, is a potential for a very violent upswing if the company or its officers understand how to deal with it and if the company is viable. If the company is not viable, blocking naked shorts will not help the company's survival.
See http://www.financialsense.com/fsu/editor...
for a discussion on naked shorting and its consequence - Failure to deliver. It is like you have a machine or circuit and suddenly the laws of conservation (of energy, matter, current etc.,) were repealed. Obviously, the engine or circuit may blow up due to accumulation at sink (or deficit at source).
No more shorting! Whole companies have gone under because of shorts.
Looks like a few banks have also made it to the short sell restriction list
http://www.reuters.com/article/marketsNe...
Isn't putting so many banks on such a list create a "moral hazard" of sorts? "You can't naked short this" implies it is weak and hence attract covered short from speculators? Sort of affirmative action for banks.
imho, yup.
This is why I'm voting for the Democrats in November. It's time to get back to the smaller government and conservative principles of the Clinton years instead of the socialist, corporate-welfare state that is currently being pushed on us by the current Republican administration.
Breeze. Would you please shut the fvck up on turning everything into politics in post about the democrat righteousness and pious POS prius owning "environmentalist" that you claim to be? You're like my ex-fat-fvck-lazy coworker at my previous company that thinks everything the democrats do is good, and everything the republicans do is bad, and yet his perpetual complaint one's own life, which was was pretty much his own doing.Dumbass things like spending nearly $50k in DVD collections with no savings, no planning, whine whine whine about not being able to afford a home, and sorry excuse for a tech worker who couldn't get sh1t done yet complains how he work gets outsourced and how he can't find a better position, and expects a welfare check in the mail for being "special". If that's what democrats represent, god help us.
Haha, that's the first time I ever heard anyone say Democrats are for smaller government and conservative principles and Republicans are for socialist, corporate-welfare state.
Haha, that's the first time I ever heard anyone say Democrats are for smaller government and conservative principles and Republicans are for socialist, corporate-welfare state.
I'm one of those rare individuals who isn't afraid to speak the truth.
Whatever you're smoking, it must be really good. Mind sharing your secret?
for a discussion on naked shorting and its consequence - Failure to deliver. It is like you have a machine or circuit and suddenly the laws of conservation (of energy, matter, current etc.,) were repealed. Obviously, the engine or circuit may blow up due to accumulation at sink (or deficit at source).
Actually, the consequences on failure to deliver are not as bad as made out in the article. There are two big problems though with naked shorting.
1) Voting rights. Shares from a naked short have no voting rights.
2) Making sure that the naked short can financially cover their position and any dividends that the stock declares.
Personally, as an investor, I don't care if the stock I buy is from a naked short unless I want to make sure I have a right to vote for board of directors etc (not that they pay much attention to the stockholders anymore - something that I think should change). Just so long as when I sell, I get the delta between purchase and sale. Dividends are what really hurt naked shorts, and having them around may reduce the speculative prices in many stocks -- grounding the price of the share back to basics, what the company earns and can pay in terms of dividends.