RSS

Category Archives: Short Selling

Short Selling II


For the past two months, I’ve argued that our current economic crisis was not caused by technical defects in our economic theory or a failure to properly manage interest, inflation or unemployment rates.  Instead, I’ve argued that the current economic crisis is the result of a collapse in our nation’s moral values.  I’ve argued that institutionalized immorality in government (political campaign contribution laws; deficit financing), finance (fiat money), the church (state-incorporated churches rather than real “churches of God”) and the people (no-fault divorce, abortion, and a “something-for-nothing” mentality) has degraded too many Americans to the status of greedy, unconscionable fools who’ve refined their capacity to predate and lost their capacity to produce.

Read the rest of this entry »

 
1 Comment

Posted by on May 24, 2010 in Economy, Moral Hazard, Short Selling

 

The Moral Hazard of Selling Short


If I bought a house for $200,000 and insured it for $1 million, that insurance policy would create a “moral hazard”.  I.e., the $1 million insurance policy against my $200,000 house being destroyed by fire would, in fact, provide an incentive for me to burn my house.  Why?  Because I could never hope to gain much more than $200,000 for selling the house, but I could instantly gain $1 million from burning it down.  A “moral hazard” is something done for a seemingly good reason (to protect against destruction by fire) that nevertheless creates an incentive to do wrong (cause the fire).

Read the rest of this entry »

 
4 Comments

Posted by on May 17, 2010 in Economy, Moral Hazard, Short Selling