Chanos’s statement reads:
“Rebuilding investor confidence should be the primary objective of any new regulatory effort and it is not clear that today’s proposals will meet that simple goal. Skeptics, independent research and critical analysis must continue to play a vibrant role for our markets to grow sustainably and with integrity. Short selling is integral to improving the efficiency of markets and enhancing market quality through narrower spreads, deeper liquidity, less volatility, and greater price discovery. In recent years, short-sellers have publicly warned the marketplace about the dangers at AIG, Lehman Brothers, and Enron, as well as sounding the alarm over the credit ratings agencies, non-bank subprime lenders, and credit insurers. Proposals to inhibit short-selling have the effect of limiting this vital market-based antidote to corporate fraud and speculative bubbles, and must be carefully weighed against the clear harm that comes from ill-conceived government intervention in basic market functions.”
How frustrating to have to agree with this jagoff. Jim Chanos is an unethical piece of crap, but the last thing we need is more government intervention in the markets. Shorting is ethical when an investor believes a company is weaker than it appears. He makes money when the stock declines. But Chanos and a few others like him don’t necessarily ascribe that definition. Chanos attacks the shit out of a stock with reports through surrogates, including Bethany McLean, to create the impression of weakness in the general public, then spreads malicious rumors through the financial system, spooking institutional investors. Then, after he’s ripped the stock to shreds, he stands back and collects billions.
So he’s right – investors should be permitted to go short on a stock without government intervention. On this one point, I will stand with Jim Chanos and say to the gov, “Step off bitch.”
Things They Say