Sunday, September 14, 2008

Don't shoot the messenger

Whenever times get rough, the populists come out. These populists, with their Wall Street suits, look a little odd, though. In this case, I'm talking about those calling for a moratorium on short-selling – a risky way to essentially bet against a stock, profiting from the drop as well as contributing to the drop. Short-sellers argue that they're only profiting from what's inevitable, and that they are in fact an early warning system, signaling that a stock is in trouble and overvalued. Interventionists, however, think that you can keep up a bubble from popping by propping it up, but that will only lead to misery and despair farther on down the road. A classic example of shooting the messenger – while Congress should be investigating the cause of the bubble itself, they're instead going around looking to rail against the aftereffects.

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