Short Selling

Finally, in a Vanity Fair article about Herbalife and hedge fund players, I found a definition (that I could understand) of what exactly is shorting a stock.  Here goes.  So you figure Company X’s stock is going to go down.  (Or you intend to bad mouth it and try to make it go down.)  You go to someone who owns, say, 1000 shares of Company X and borrow those shares.  You promise to return the shares at a later date.  You pay the lender some cash.  Company X is selling for $35 a share.  You sell the stock and get $35,000.  Now, if it goes down to say $25 per share, you reach into your cash pool of $35,000 and buy 1000 shares for $25,000.  You keep $10,000.

Oh by the way, if the stock goes up to $45 a share when it comes time to “return” the stock, you lose $10,000.

Happy investing!



Why some folks “hate” us

We like to export democracy because we think it is good for people to be “free.”  Now some countries, groups and areas seem to really not like us. Could they possibly have a point?

Suppose a bunch of people who didn’t talk like us, look like us or know much about our history came over here and tried to change how we play football by getting rid of the authority of the coach and the quarterback and insist that on each play all of the players in the huddle would vote on what play to run?  We might call them nuts and resent them for destroying our beloved past time.  Or suppose the same group decreed that all family matters would be decided by a vote where the children’s vote counted the same as the parents’ vote?  Don’t think that would go over too well.
Don’t get me wrong.  I like the American system just fine.  However anyone who thinks democracy will automatically produce better decisions and results than other systems (monarchy, dictatorship, tribal) is a well-intentioned fool.  Remember democracy brought us prohibition, destruction of the Native American way of life, slavery etc.  if other people want democracy and want our help in establishing it, fine.  If not, who are we to impose it?

One World Order Revisited

In this period of global economic stagnation, I am reminded of an aspect of U.S. history.

The problem in Europe has often centered on the fact that Germany, for example, doesn’t want its money and credit used to rescue Greece, Italy, etc.  Now, in America, if Mississippi is in the doldrums we have a federal system that allows credit and money to flow to our fellow citizens in Mississippi.

But there was a time when that couldn’t happen.  From 1777 until 1789 we had Articles of Confederation and Perpetual Union.  That system of independent sovereign states was deemed totally inadequate to fulfill the goals of a nation which needed to grow and expand.  Hmm….grow and expand.  Where do we keep hearing those words these days?

Well, for years we have recoiled at the horror of the secret cabal attempting to institute a new ONE WORLD ORDER.  Oh the horror….the horror. 

If there was a one world order then India and Greece would be part of a global (read federal) system just like Mississippi and Ohio are part of a federal (read global) system.

Maybe all these evil, rich industrialists, bankers and politicos who advocate a one world order are not really plotting to enslave us all but rather they see the problems of nation states attempting to resolve economic problems as being quite similar to the problems of states attempting (and failing) to resolve economic problem under the Articles of Confederation.


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