Consider the following example of Zion Bank Corp (ZION) last friday. At 9:28 it was trading approximately $50. By 10:00 it had printed $108, $46, and everything in between. HOW IS IT BETTER FOR FINANCIAL STABILITY TO HAVE SOMEONE PAY $100 AND THEN WATCH IT GO TO $50. I'm sure more than a few people got absolutely destroyed because of the short sale moratorium. Even more lucky gamblers were bailed out after doubling and quadrupling down on losses. Luckily I was not one of either group, but even so I realize that the market has fundamentally changed from a free market to a rigged one.
The risk factor of a company's political importance has to be brought to the very core of our new market models. Economic reality is shunned in favor of betting on blatant market manipulation.
-RiskAffine
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