Posts filed under “Taxes and Policy”
A long/short hedge fund manager of my acquaintance went to short some Morgan Stanley (MS) via a B/D that clears through Wachovia:
The Trader comes back: "Wait a second — that’s on the list — I cant short that."
The Fund Manager says: No, I don’t want to Naked Short it, we have already located a borrow — this is a clean, legitimate short sale.
Trader: Nope, we clear through Wachovia — and its on the list – NO SHORTING THESE 19 PRIMARY DEALER NAMES — PLUS FANNIE AND FREDDIE — AT ALL.
Fund Manager: That’s ridiculous — how can you not execute a legitimate borrowed short?
Trader: Wachovia. Dems da rulez. You have to go elsewhere.
Fund Manager: Consider it done.
Postscript: FM added to his Morgan short elsewhere, and initiated a new Merrill Lynch (MER) short. I don’t know what it says about Wachovia that they won’t even allow shorts in those names (deep doodoo??).
I am paraphrasing Jim Grant, but "Shorting is the financial world’s equivalent of free speech."
"The political establishment is embracing a time-honored response to the nation’s economic turmoil. It’s going on a witch hunt.Politicians of all stripes worry that improper trading by short sellers has contributed to turmoil in the stock markets. And "excessive" oil traders have replaced oil-company executives — themselves twice keelhauled by congressional committees this year — as the bogeymen behind the run-up in gas prices. For Washington veterans, the sharpened attacks are the incarnation of a standard political trope, one found especially in election years"
Economic Woes Get a Fix: Witch Hunt
WSJ, July 19, 2008; Page A3
I did three segments Tuesday on Yahoo Tech Ticker at the Nasdaq:
Here is the last, on Bailouts, Fannie & Freddie:
Click for video
Bailout Nation: Paulson, Cox, Shorts Weigh in On Fannie, Freddie
Yahoo Tech Ticker, Jul 15, 2008 07:00am EDT