Much of the debate in recent few days has been about the massive amount of speculative positions in the stocks and other securities. People are blaming the short selling speculators for the demise of firms like Lehman Brothers, AIG, Bear Sterns, and many more. The argument is, even though the positions of these companies is sound in the long term, short sellers are putting undue pressure on the firms, and has resulted in forced liquidation.
I personally would think of these arguments as lame excuses. While not myself a supporter of naked short-selling to start with, I nonetheless believe that most of the firms which have fallen have fallen for the right reasons. If short-selling was to be blamed, and their balance sheet were sound, why would the senior debt holders in Lehman get only 8-9 cents per dollar as recovery? They ought to be making a lot more than this.
Short-selling didn't (or rather couldn't) have changed anything. At the low valuations at which Lehman Brothers or Bear Sterns was finally sold, the Management could easily have bought the firm with the personal pay-cheques. The fact that they themselves didn't do the same make the whole speculation argument seem hollow.
I personally would think of these arguments as lame excuses. While not myself a supporter of naked short-selling to start with, I nonetheless believe that most of the firms which have fallen have fallen for the right reasons. If short-selling was to be blamed, and their balance sheet were sound, why would the senior debt holders in Lehman get only 8-9 cents per dollar as recovery? They ought to be making a lot more than this.
Short-selling didn't (or rather couldn't) have changed anything. At the low valuations at which Lehman Brothers or Bear Sterns was finally sold, the Management could easily have bought the firm with the personal pay-cheques. The fact that they themselves didn't do the same make the whole speculation argument seem hollow.
