Protection Against Predators
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So I had to decide which one it was.
Was the uptick rule fostering unrealistic stock valuations by making it hard for speculators to take a “negative view” on the stock price? Or was it protecting shareholder investments against predatory attacks by evil hedge funds?
Do large, public corporations actually need protection against predators? If they need protection from predators then shouldn’t they just die, like animals in nature that can no longer defend themselves? Aren’t these predators performing a valuable function by culling the herd of the elderly, weak firms like ours?
Or, was natural selection perhaps not the best analogy for thinking about capitalism in general, or banking crises in particular? The idea that the basic units of production could be forced to cease operations simply because enough hedge funds (who were not the owners of the company. Remember, short sellers sell stock that is on loan from another party) had expressed a “negative view,” via financial markets, seemed totally contrary to the purpose of those markets, in my opinion.
I mean, we were supposed to be creating wealth and not destroying it right? Or at least, if we weren’t creating wealth, we were supposed to be enabling wealth creation somehow, not disabling it, right?
And in any case, this means of bringing down the bank could only work because of government-imposed capital regulations and government-imposed methods of measuring capital, which incorporated the market value of the company shares as an input.
Should capitalism even provide a purely offensive vehicle for companies to attack each other? Why should we even tolerate corporations, which are supposed to be creating wealth, attempting to profit from killing each other?
“Because FREEEDDDOOOMMM!!!!” They replied.
But if we were really in a “free market” then our share price would have nothing to do with our ability to keep operating our business. It could only affect our ability to access financial markets to raise additional capital.
