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November 17, 2011


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Very well written as always, but some concepts are confused. Greed is simply the desire to have more. Is it moral or not, don't know, but it is in our nature (and animal's too). But what humans have invented and achieved, are rules that limit this behaviour of wanting more. Some means are considered acceptable (legal), some not. We also invented "solidarity" and "wealth re-distribution". So this is the crucial point: how do we re-distribute wealth. The other issue that is forgotten here is impact of short term behaviour on long-term. Short-termism can endanger, jeopardize, annihilate long-term objectives. If I empty the oceans until the last fish to make quick bucks, this will starve to death entire populations. If I cut the Amazonian forest to plant soja and feed the cattle, I endanger the whole ecological equilibrium of the Earth and ultimately of mankind. Global warming is another example of course

Tim Rhodes

Although though provoking, I feel the presentation confuses short term thinking with short selling.
Further, not all short selling is about speculation (and don't forget if the price of the shorted stock rises, the speculator is faced with an unlimited loss)

The vast majority of selling short takes place through the repo markets or through the use of derivatives (both can have the same effect). The evolution of these markets has reduced spreads and increased liquidity. Liquidity is one of the keys to facilitating issuance, and hence getting finance for governments, supranational agencies and corporates - nothing short term about that, but enabled by those very transactions the speaker implies are evil.


1 Note that when at one stage restrictions were placed by the government on short selling they didn't ban this in market makers (the activities the speaker describes) because they knew it would jam the markets.

2 We tend to think of markets in London as being the 'London Stock Exchange' but in volume terms this is very small - they don't even trade the majority of shares now. No, the capital markets which dominate London markets (and where the government gets the tax from) are FX and other 'over the counter securities markets' which simply would NOT WORK without the ability to short sell.

Chris Skinner


I think you have assumed that my assertion is that all short selling is evil. That's not what I'm saying. But if short selling is used to drive value away from an asset for short-term gain, which is part of some players' game, then that is bad. Plus short selling is only referenced in the opening and is nit the thrust of the speech, which is about short term thinking.

So you're right - lets not confuse the issues raised here.


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