"“We have lent a huge amount of money to the U.S. Of course we are concerned about the safety of our assets. To be honest, I am definitely a little worried.” "

Chinese premier Wen Jiabao 12th March 2009

""We have a financial system that is run by private shareholders, managed by private institutions, and we'd like to do our best to preserve that system."

Timothy Geithner US Secretary of the Treasury, previously President of the Federal Reserve Bank of New York.1/3/2009

Thursday, September 25, 2008

No sense and only nonsense in Sentamu

It is impossible to believe how stupid and ignorant the publicity hungry Archbishop of York John Sentamu is.

"To a bystander like me, those who made 190 million pounds deliberately underselling the shares of HBOS ... are clearly bank robbers and asset strippers," he said in a speech to international bankers in London on Wednesday evening.

If he wants to turn over the moneychangers tables he should wise up on how short selling operates - those short sellers "borrowed" shares held by "long" holders of HBOS shares - probably inlcluding ones that hold the funds that will pay his much required retirement pension.

Those lenders do not, like Christians, do it out of the goodness of their heart - they charge for it, and any profits so made, swell their coffers whether the short sellers makes a profit or not.

Often these short sellers get caught "short" and the share price rises and they have to buy in a rising market and so lose on the bet they placed .

Just talk to Mr Joseph Lewis who spent over US$700 Mn on shares in Bear Stearns in the last 12 months, about losing money betting against the market - see Tuesday, September 11, 2007 Bear Stearns buy in of 8.1 Mn shares = biggest shareholder is Joseph Lewis - East End boy made good


Stef said...

Of course, if you're engaged in a spot of predatory naked short selling you don't have to borrow stock off anyone

but I doubt very much if these Christians (sic.) who have only just discovered that usury goes against the teachings of their Christ have the wit to appreciate the difference

Anonymous said...

"In any case I find the concept that things that are borrowed can be sold to be rather bizarre. If I rent a car and try to sell it, I would expect to be arrested. If I borrowed a friends tool and sold it, it would probably be the end of the friendship.

While short selling may make for market liquidity short term, I doubt that there is a long term benefit to it except to market makers and those specializing in it.

There are many markets that are liquid with out short selling. The labor market comes to mind. Clothing markets don't have short selling and yet no one runs around naked. Same thing goes for food items not trading on the commodity exchanges.

Short selling facilitates the market makers and the flipping of financial assets quickly. It helps to create fast market conditions where long term investment is held in contempt because no one is committed to their investments. If investments were less liquid like real estate, people would likely not be so flip about buying a particular stock or commodity."

Volume of trades would slow, much to market makers dismay, but financial decisions would hopefully become more sound since buyers would be committed for longer time periods due to illiquidity. There would still be ups and downs as in the current housing market, but I doubt the world would come to an end or that markets would cease to function.
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ziz said...

You confuse the retail trade with wholesale - shorting, extended credit and all the activities of the financial markets can be found amongst the fabric traders, carriers, labour only suppliers to fcatiries, off balance sheet financing by suppliers....

You may be surpised no-one goes naked but clothing manufacturers do from time to time fail.

(C) Very Seriously Disorganised Criminals 2002/3/4/5/6/7/8/9 - copy anything you wish