Don't agree with your understanding of hedge funds and markets. Also, I am in favor of regulation. Just not the kind that gets dished out like bad cafeteria food in this country. I am in favor of big banks listing each and every position for all to see--not just for the cozy Fed or the dozy SEC.
Real transparency would allow problems like these to be seen and analyzed by people with the skills to do so--perhaps you yourself. And we don't have to pay such people a cent--just don't shoot them when they don't like the bets others make and take the other side by shorting.
I can understand why short sellers who operate with little information get a bad rap. In a market starved of information, it pays to start panics with rumors. Let's add more information to the market so these people can serve some use.
I didn't mean to imply that you were anti-regulation, nor did I intend to come across as attacking your call to transparency - I just disagree with your stance on shorts. No doubt I elaborated a bit too much on the implications of this, but in a concrete, real sense, short positions in the market helped to drive the bubble higher than it would otherwise go. Eventually those positions did "pop" the bubble and bring prices down. AIG was the company sitting on the other side of a lot of those short positions when they finally popped the bubble.
Most of my understanding of how these short positions drove the bubble comes from articles like this propublica report: http://www.propublica.org/feature/the-magnetar-trade-how-one.... Any explanation I'd give would just be a summarization of what I've picked up there. I found the case pretty compelling.
Real transparency would allow problems like these to be seen and analyzed by people with the skills to do so--perhaps you yourself. And we don't have to pay such people a cent--just don't shoot them when they don't like the bets others make and take the other side by shorting.
I can understand why short sellers who operate with little information get a bad rap. In a market starved of information, it pays to start panics with rumors. Let's add more information to the market so these people can serve some use.