I was reading an article last week about the SEC temporary ban on short-sales and came across the following quote:
Short-selling can contribute to efficiency while adding liquidity to the markets. But a recent wave of the maneuvers — profiting by selling unowned shares of companies in the anticipation their prices will drop — has been blamed in part for the demise of venerable investment firm Lehman Brothers and other big financial companies.
There appears to me to be a growing trend towards a lack of acceptance of personal responsibility (which I’m witnessing more and more over time in the classroom, by the way). While I know they aren’t blaming the collapse of Lehman Brothers entirely on short-sales, let’s get it straight. The executives, managers, and decision-makers at Lehman Brothers are responsible for the demise of Lehman Brothers. Yes, short-selling may have marginally accelerated the inevitable collapse in stock price. Yes, Alan Greenspan may have aided this mess with almost three years of historically aggressive expansionary monetary policy. That being said, the people at Lehman Brothers freely made their bad decisions. Lehman Brothers is responsible for the demise of Lehman Brothers. Let us not forget that.
