MarionPolk's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/228152/comments http://seekingalpha.com/article/95304/comments?source=feed#comment-254125 254125
Selling America Short

Imagine a world in which anyone can buy any amount of fire insurance on any building, regardless of its value or ownership. Imagine that anyone can buy any amount of life insurance on any unrelated individual, without their knowledge or consent.

The economic incentives in such a world guarantee that many buildings will burn, and many will die, to the financial benefit of those buying the insurance policies where they have no risk of actual loss.

Wall Street and the SEC have created such a world. Credit default swaps allow a party to reap a financial reward when a company fails. Shorting the ABX index allows a party to reap a financial reward when asset values of certain financial instruments decline in value. Unlimited shorting of stocks, without restraint as price declines, magnifies both the speed and magnitude of the price decline. Purchase of puts sends a stock price lower as the option market makers sell unlimited, unregistered, un-issued shares into the market.

Where the capital markets once functioned as a source of financing for new business ventures, Wall Street and the SEC have turned the capital markets into an unregulated, rigged casino where gambling and asset destruction are the main attractions. Economic incentives now heavily favor the destruction of investment capital, rather than the creation of additional capital.

What can we expect to be the logical result of the past 8 years of SEC and Wall Street corruption of our capital markets?
]]> Sun, 14 Sep 2008 12:56:46 -0400
Selling America Short

Imagine a world in which anyone can buy any amount of fire insurance on any building, regardless of its value or ownership. Imagine that anyone can buy any amount of life insurance on any unrelated individual, without their knowledge or consent.

The economic incentives in such a world guarantee that many buildings will burn, and many will die, to the financial benefit of those buying the insurance policies where they have no risk of actual loss.

Wall Street and the SEC have created such a world. Credit default swaps allow a party to reap a financial reward when a company fails. Shorting the ABX index allows a party to reap a financial reward when asset values of certain financial instruments decline in value. Unlimited shorting of stocks, without restraint as price declines, magnifies both the speed and magnitude of the price decline. Purchase of puts sends a stock price lower as the option market makers sell unlimited, unregistered, un-issued shares into the market.

Where the capital markets once functioned as a source of financing for new business ventures, Wall Street and the SEC have turned the capital markets into an unregulated, rigged casino where gambling and asset destruction are the main attractions. Economic incentives now heavily favor the destruction of investment capital, rather than the creation of additional capital.

What can we expect to be the logical result of the past 8 years of SEC and Wall Street corruption of our capital markets?
]]> http://seekingalpha.com/article/87653/comments?source=feed#comment-217399 217399
The SEC contacted me, but did nothing (as far as I know) with the information I provided.]]> Tue, 29 Jul 2008 11:12:04 -0400
The SEC contacted me, but did nothing (as far as I know) with the information I provided.]]> http://seekingalpha.com/article/85641/comments?source=feed#comment-208479 208479
If in fact the SEC allows the OMM exemption to continue, then any other restrictions on naked short sales aren't worth the bandwidth used to publish them.

Unlimited share creation equals unlimited capital destruction. Granted no journalist could be expected to grasp this simple concept, but it could be hoped that SEC commissioners are more sophisticated than stenographers, who just transcribe and print the contents of phone calls they receive from hedge fund managers.
]]> Fri, 18 Jul 2008 08:59:22 -0400
If in fact the SEC allows the OMM exemption to continue, then any other restrictions on naked short sales aren't worth the bandwidth used to publish them.

Unlimited share creation equals unlimited capital destruction. Granted no journalist could be expected to grasp this simple concept, but it could be hoped that SEC commissioners are more sophisticated than stenographers, who just transcribe and print the contents of phone calls they receive from hedge fund managers.
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