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Video: The Crisis of Credit Visualized

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Bagua5/02/2009 5:37:13 pm PDT

re: #321 itellu3times

Done on a sufficient scale, naked shortselling can saturate demand, until the short-seller can cover at the lower price. And among other reasons (namely, fear that naked shorts never will be able to cover) that is why it is illegal.

I think regulators (insofar as they are competent or awake) never anticipated the short-sellers could marshall that much money - nor that anyone with that much money would so blatently flout the law, so that major institutions would be at risk. Well, we know better now, perhaps.


Naked shorts are not illegal, so they do not flout the law.

Yes they can “saturate” the buy side but they also provide beneficial liquidity to those who want to buy. They are the suckers when things go up.