As hedge funds or holding short positions (even legitimate short positions) begin to fail who now owes the stock and when will it be called and by whom?

Even worse is the potential of a rally in a heavily shorted and badly beaten down stock as its intrinsic value is realized causing yet more hedge funds to come crashing down.

As Ted Butler says and I have been of the opinion longer than that shorting stocks should be eliminated.

Truth is that no one wants to admit ... it robs, not adds liquidity to the market .... in the long run as companies fail with short positions ... they have recieved the money and they pay back nothing (because they have nothing). In the meantime large bonuses have been paid to the managed hedge finds/investement banks etc.

When bankruptcy occurs ... those payables are never paid! A truly magnificent form of ripping off honest investors so they are given the opportunity to gamble on a downward movement in a company.

Unlike an investment in a company which is intended to add productive value, a short wishes for the worst for a company ... a very sinister way to make money ... how easy it is to cause a price drop.

How about an employee at a drug company, a food products company etc ... shorting a number of shares prior to tainting the products as they head to the market ... instant drop in price to reward a despicable act.

Think about it folks ... options allow a person to take chances without having the same potentially disasterous effect.

Orgy