I don’t claim to understand a great deal about the share market, and the current turmoil it’s enduring.
I’ve heard the practice of short selling explained twice on the TV or radio in the last few days, and while I think I get how it works, I can’t understand why the owners of the shares involved would agree to it, if they know it drives prices down… but I assume there must be some explanation.
As for naked short selling — well, I know I’m missing something there, as how one can make use of a something without possessing it is beyond me.
All in all, my layman’s view, based on minimal information, would be that short selling and naked short selling sound like dodgy practices that are odd things to be a part of the global economy. In fact the whole share market seems to be like a stack of cards… which is now toppling.
The big US government bailouts are interesting. It was very amusing to hear Derek Guille on 774 note that it was “pleasing to see the Neocons embracing socialism”.
What does this all mean to the person in the street? Well, I got my annual superannuation statement the other week. It had a cover note that basically urged people not to panic about losses on the markets, and emphasising that in the longer term, growth has been strong. I turned over the page to find that my retirement fund has dropped by 20% in the past 12 months.
Oh well, if the bailout is what’s being done, I hope it works.