From my blog at http://theatleeappeal.com
While skimming through the depths of the internet in preparation for my new updates, I came across an article from Politico that caught my attention. The link for the article will be posted under POLITICS with the same title as above. So, what could possibly be so interesting about the Democrats and their new found profession of reading? Well, it only has to deal with one book. ‘The Big Short’ by Michael Lewis has now become the Bible for congressional Democrats. This whole story is rather ironic the more you think about it. These are the same people that created a 2,000 page healthcare bill which NONE of them read in its entirety. But then again, who in their right mind would want to read something that consisted of 2,000 pages of nothing but legal jargon. That’s the Washington way. Create a bill so big that nobody can read it, then pass it just so people “will know what’s in it”. Or, don’t read a 10 page law regarding immigration in Arizona, but go all over the country condemning it just before you admit to have never read it. Being mentally handicapped automatically qualifies you for a job in Washington.
So, what is this book about, and why does it send tingling sensations up the legs of the Democrats? Here is the Politico’s short narrative of the book: “ “The Big Short” tells the story of the economic meltdown through the eyes of a handful of investors who were smart enough to see the subprime mortgage crisis coming — and greedy enough to cash in on it.” Now, something in this description should throw you off (that is if you believe in capitalism). The last few words caught my eye, “greedy enough to cash in on it.” This is where the Democrats get giddy. Apparently, if you study a situation long enough and are able to make a correct prediction that will make you money, you should not be allowed to because it means you are greedy.
I’m going to go deeper into this. So the gist of ‘The Big Short’ is that short sellers created the crash. Short selling is a very risky way to invest. Democrats as of late try to lump risk taking and greed into being the same thing. Short selling is the method of borrowing a certain stock or asset and promising to buy an identical stock or asset in the future at a lower rate. The difference from the price of the borrow date to the future buying date is the profit. Now, if you go short on something that actually never decreases in value but increases, you could possibly have an infinite amount of a loss.
Democrats love to chastise short sellers and speculators for “manipulating the markets.” However, these people are the markets in a sense. These individuals make a living by constantly studying and observing market forces and trends while making future predictions on how they believe the market will react. So true, a small amount of people did make an absolute killing on the housing crash, just as some people made a killing going short on oil after its bubble burst. What about the speculators who bought houses during the bubble, with no intention of actually living in them, then selling them while making a huge profit? Why is this bad? What is wrong with people legally making money? These investors saw that the government had effectively created a false increase in demand for housing which spiked home values. Just like any commodity, there is always a breaking point to which price, supply, and demand will not work together. They saw that the breaking point was near and bet that there would be a huge crash. When the breaking point arrived, they cashed in. Some how this is evil? This is why we need more regulation? Because people make money even when there is a market crash?
Sadly there are a lot of people out there who side with the Democrats on this. “Yeah, those evil investors! They are so greedy! How dare they make money while so many people suffer! Tax em! Screw em!” Yeah, it’s such a shame that people use their talents and diligence to make a living. Humans need to eat food and drink water in order to survive. How dare companies exploit the needs of humans by making and selling food and water in order to make a profit! I’ve got an idea for these Democrats in Washington. Put down the book that you all are so infatuated with and pick up any economics 101 text book. It is in a book such as this where you will find impossible-to-understand concepts such as supply and demand. Want to know a big difference between conservatives and liberals? Conservatives understand that every market action has two sides: a buyer and a seller. We understand that the seller must first identify a need or want that a buyer can purchase. Short selling is no different. If you identify an asset that has reached an unsustainable level such as housing, you put yourself in a situation to capitalize on the value reversal. Democrats are on the verge of doing great harm to economic fundamentals. Don’t fall into their trap of wealth envy.