This is mostly correct and a very good job of simplification.

Add in a bit about leverage, margin maintenance requirements, and rehypothecation and you'l paint the whole picture.

The reason I said "mostly" correct is that an argument can be made for leverage being capable of creating greater than a 140% short ratio. It entails a ton of risk, and every party involved is aware of the rules and the risks of leverage. They are just trying to not have to pay for their mistakes and they'll argue systemic counter-party risk.

You can certainly argue that the current regulations are insufficient to protect from this type of manipulation, but it is certainly possible under the current regime.

Whatever happened to Creative Destruction?

This is mostly correct and a very good job of simplification.

Add in a bit about leverage, margin maintenance requirements, and rehypothecation and you'l paint the whole picture.

The reason I said "mostly" correct is that an argument can be made for leverage being capable of creating greater than a 140% short ratio. It entails a ton of risk, and every party involved is aware of the rules and the risks of leverage. They are just trying to not have to pay for their mistakes and they'll argue systemic counter-party risk.

You can certainly argue that the current regulations are insufficient to protect fro this type of manipulation, but it is certainly possible under the current regime.

Whatever happened to Creative Destruction?