Taking Over the Asylum
Last week governments across Europe banned 'short-selling' in their stock markets.
Short-selling is a practice whereby traders bet unimaginably large sums of money in the hope or expectation - that the value of a particular stock or currency will fall.
The bigger the fall - the greater the gain for the trader.
European governments moved to ban this practice temporarily - because these traders were hunting in packs and co-ordinating efforts to achieve their aim - to deliberately drive values down.
So instead of the old adage where investors had to 'speculate to accumulate' - these guys were actually in the business of 'speculating to depreciate' - but bizarrely would still make a killing.
Now this seems like an odd way for a stock exchange to behave - it sounds as if Gordon Gekko and other assorted lunatics have actually succeeded - in taking over the asylum.
No one these days is arguing against the need for a market-based economy - essential features of which are competition and open financial markets for potential investors - to greater or lesser degrees.
Even China and the countries that comprised the old Soviet Union have embraced the market economy - so the issue is not about going back to the bad old days.
When the world was still at war over which was the true path - capitalism or communism?
Capitalism has won the day decisively - and rightly so - because democracy, personal freedom and human rights are part of the deal - even if all countries of the world are not moving at the same pace.
But that doesn't mean - to my mind anyway - that markets, traders and investors - can do exactly what they want - they can be and should be properly regulated.
Surely a stock market should about investing for positive reasons - to promote the growth and expansion of successful businesses - to encourage the development of new resources and technologies.
And if so, then what the hell has that got to do with betting on particular stocks or currencies - in the hope that they will fall - or perhaps even fail altogether?
Who benefits from such a cynical practice - and why do the regulatory authorities allow them to continue?
Because that doesn't sound much like a stock market to me - at least the kind that Andrew Carnegie would recognise - or Warren Buffet or Bill Gates for that matter.
No that sounds like Bernie Madoff and a few pals betting on a bout of rioting and looting in the streets - then posting a message on Facebook inviting other lunatics to join the party.
Short-selling is a practice whereby traders bet unimaginably large sums of money in the hope or expectation - that the value of a particular stock or currency will fall.
The bigger the fall - the greater the gain for the trader.
European governments moved to ban this practice temporarily - because these traders were hunting in packs and co-ordinating efforts to achieve their aim - to deliberately drive values down.
So instead of the old adage where investors had to 'speculate to accumulate' - these guys were actually in the business of 'speculating to depreciate' - but bizarrely would still make a killing.
Now this seems like an odd way for a stock exchange to behave - it sounds as if Gordon Gekko and other assorted lunatics have actually succeeded - in taking over the asylum.
No one these days is arguing against the need for a market-based economy - essential features of which are competition and open financial markets for potential investors - to greater or lesser degrees.
Even China and the countries that comprised the old Soviet Union have embraced the market economy - so the issue is not about going back to the bad old days.
When the world was still at war over which was the true path - capitalism or communism?
Capitalism has won the day decisively - and rightly so - because democracy, personal freedom and human rights are part of the deal - even if all countries of the world are not moving at the same pace.
But that doesn't mean - to my mind anyway - that markets, traders and investors - can do exactly what they want - they can be and should be properly regulated.
Surely a stock market should about investing for positive reasons - to promote the growth and expansion of successful businesses - to encourage the development of new resources and technologies.
And if so, then what the hell has that got to do with betting on particular stocks or currencies - in the hope that they will fall - or perhaps even fail altogether?
Who benefits from such a cynical practice - and why do the regulatory authorities allow them to continue?
Because that doesn't sound much like a stock market to me - at least the kind that Andrew Carnegie would recognise - or Warren Buffet or Bill Gates for that matter.
No that sounds like Bernie Madoff and a few pals betting on a bout of rioting and looting in the streets - then posting a message on Facebook inviting other lunatics to join the party.
