The stupid risks by elites with political power over the system are not exactly stupid per se, they’re more like evil, corrupt, dishonest risks..... Risks taken with the calculation that you’ll get bailed out if you lose due to the power you have over the government. Same thing with the S&L scandal. Disregard for the economic consequences to everyone else as long as you’re still high on the hog.
Trump said “our leaders are so stupid” regarding China, because that explanation is less controversial than the reality, but that wasn’t the real issue. The real issue is that they’re corrupt and will sell out the country and merge with the CCP if they think they can make money off of it. That’s the real problem. Disregard for the population as long as you’re still in the oligarchy.
If they were ethical then they’d just be stupid, but they’re not ethical and the reality is that it’s corruption.
Well yes, I agree. Capital management funds are free to take "stupid risks" because they know their corrupt government buddies will undermine the free market and bail them out if they fuck up.
This is what is evil, not short selling. We should all be allowed to take on the risks associated with volatile or unbounded-risk investments, but we should ALL have to suffer the consequences of those choices equally, big firms and government officials should not be exempt and play by different rules. When they fuck up, they should burn like everyone else would in the same position.
I agree that short selling isn’t bad in theory, honestly though I still wonder if it should be illegal or more limited somehow or if put options should be used instead. But what do you think about naked short selling? I mean being able to borrow, sell, then borrow what you sold again to sell it again seems like a massive recipe for abuse.
Of course it should not be illegal. You might as well make it illegal to sell a long position too at that point, or make trading on margin illegal.
Naked puts are even riskier than shorting common stock (just as risky as naked calls) and are derivatives so they don't drive the price (as much).
This is why it is a red flag when Nancy Pelosi buys 1M in calls. They could easily expire out of the money and worthless, and she would lose the entire premium she spent. Nobody buys 1M in naked contracts without knowing something. The fact that New TSLA dealings were announced a week later means she should be in prison.
And it doesn't work like you said, because you have to BUY to close out a short sale of common stock, which drives prices up. You don't short, drive the price down, and then immediately profit because you now owe a debt that varies in value greatly with time to whoever you borrowed from.
Thats how short squeezes work. People short, price goes up, the short sellers owe stock to someone and they have to buy it back but don't want to pay more to buy it back than what they originally sold for, so this drives the price up further, more short sellers have to buy to cover, ect. Ect. So anyone that shorts a stock will eventually drive the price up in the future when they close the position, just like any long buyer will drive the price down when they eventually sell to take profit. Until then, any and all gains or losses are unrealized.
Trading on margin isn’t illegal, but it is more limited now than it was in say 1920. My vague understanding is that the 1929 crash was caused by insane margin trading like 1000%.
I guess what I’m getting as is, can you think of any limit on short sales that would prevent the “stupid” corrupt risk taking by hedge funds? I mean the obvious answer is “don’t bail them out” so they just destroy themselves, but it seems impossible to prevent this sort of political corruption.
The stupid risks by elites with political power over the system are not exactly stupid per se, they’re more like evil, corrupt, dishonest risks..... Risks taken with the calculation that you’ll get bailed out if you lose due to the power you have over the government. Same thing with the S&L scandal. Disregard for the economic consequences to everyone else as long as you’re still high on the hog.
Trump said “our leaders are so stupid” regarding China, because that explanation is less controversial than the reality, but that wasn’t the real issue. The real issue is that they’re corrupt and will sell out the country and merge with the CCP if they think they can make money off of it. That’s the real problem. Disregard for the population as long as you’re still in the oligarchy.
If they were ethical then they’d just be stupid, but they’re not ethical and the reality is that it’s corruption.
Well yes, I agree. Capital management funds are free to take "stupid risks" because they know their corrupt government buddies will undermine the free market and bail them out if they fuck up.
This is what is evil, not short selling. We should all be allowed to take on the risks associated with volatile or unbounded-risk investments, but we should ALL have to suffer the consequences of those choices equally, big firms and government officials should not be exempt and play by different rules. When they fuck up, they should burn like everyone else would in the same position.
I agree that short selling isn’t bad in theory, honestly though I still wonder if it should be illegal or more limited somehow or if put options should be used instead. But what do you think about naked short selling? I mean being able to borrow, sell, then borrow what you sold again to sell it again seems like a massive recipe for abuse.
Of course it should not be illegal. You might as well make it illegal to sell a long position too at that point, or make trading on margin illegal.
Naked puts are even riskier than shorting common stock (just as risky as naked calls) and are derivatives so they don't drive the price (as much).
This is why it is a red flag when Nancy Pelosi buys 1M in calls. They could easily expire out of the money and worthless, and she would lose the entire premium she spent. Nobody buys 1M in naked contracts without knowing something. The fact that New TSLA dealings were announced a week later means she should be in prison.
And it doesn't work like you said, because you have to BUY to close out a short sale of common stock, which drives prices up. You don't short, drive the price down, and then immediately profit because you now owe a debt that varies in value greatly with time to whoever you borrowed from.
Thats how short squeezes work. People short, price goes up, the short sellers owe stock to someone and they have to buy it back but don't want to pay more to buy it back than what they originally sold for, so this drives the price up further, more short sellers have to buy to cover, ect. Ect. So anyone that shorts a stock will eventually drive the price up in the future when they close the position, just like any long buyer will drive the price down when they eventually sell to take profit. Until then, any and all gains or losses are unrealized.
Trading on margin isn’t illegal, but it is more limited now than it was in say 1920. My vague understanding is that the 1929 crash was caused by insane margin trading like 1000%.
I guess what I’m getting as is, can you think of any limit on short sales that would prevent the “stupid” corrupt risk taking by hedge funds? I mean the obvious answer is “don’t bail them out” so they just destroy themselves, but it seems impossible to prevent this sort of political corruption.