Once you’ve read this piece and seen the video, see the follow-up story, Greg Gutfeld’s Gutless Apology.
This is even beyond Greg Gutfeld’s run-of-the-mill ignorant, this is the man – and I use the term very loosely – taking it to all-new lows in a piece on the Canadian military and its Afghanistan mission:
The Big Takeover (here’s the regular version, and here’s the single-page “printer-friendly” version) is a Rolling Stone article that suggests that the global economic crisis isn’t about money, but power, and that Wall Street insiders are using the bailout as fuel for an all-out move to take over. Here’s an excerpt from the end of the article:
As complex as all the finances are, the politics aren’t hard to follow. By creating an urgent crisis that can only be solved by those fluent in a language too complex for ordinary people to understand, the Wall Street crowd has turned the vast majority of Americans into non-participants in their own political future. There is a reason it used to be a crime in the Confederate states to teach a slave to read: Literacy is power. In the age of the CDS and CDO, most of us are financial illiterates. By making an already too-complex economy even more complex, Wall Street has used the crisis to effect a historic, revolutionary change in our political system — transforming a democracy into a two-tiered state, one with plugged-in financial bureaucrats above and clueless customers below.
The most galling thing about this financial crisis is that so many Wall Street types think they actually deserve not only their huge bonuses and lavish lifestyles but the awesome political power their own mistakes have left them in possession of. When challenged, they talk about how hard they work, the 90-hour weeks, the stress, the failed marriages, the hemorrhoids and gallstones they all get before they hit 40.
"But wait a minute," you say to them. "No one ever asked you to stay up all night eight days a week trying to get filthy rich shorting what’s left of the American auto industry or selling $600 billion in toxic, irredeemable mortgages to ex-strippers on work release and Taco Bell clerks. Actually, come to think of it, why are we even giving taxpayer money to you people? Why are we not throwing your ass in jail instead?"
It’s quite telling that almost every article on the recent restrictions on short selling (or “shorting”) stocks includes a couple of paragraphs explaining what short selling is. The shortest explanation — “It’s making money by betting that a stock will go down” — is counterintuitive. The English idiom “to sell something/someone short” adds to the confusion, because it means “to underestimate the value of something/someone”, which is essentially the opposite of short selling.
In this article, I’m going to explain the basics of short selling and give you enough background material for you to read articles about the current state of the financial world without getting complete confused. And yes, I’ll make it fun.
About five years ago, I attended a gala and at one point had the accordion-assisted privilege of enjoying some cocktails with some very pretty ladies, an event I chronicled in this entry.
An excerpt:
At one point in the evening, I was having some Campari-and-sodas with a group of charming young women, all of whom were wearing The Little Black Dress. The one who was sitting beside me cupped her hand, turned to me and whispered “See that guy? My friend Lisa* longs him.”
(* Not her real name.)
I interpreted “longs” as “longs for”. However, later on in the conversation, some guy took a seat beside Lisa and started hitting on her with the grace of a rhino on NyQuil.
“Ugh,” said She Who Sat Beside Me. “She really shorts him. I think we’re all shorting him.”
That’s when it clicked. The girls all worked in the financial industry together; in fact, it seemed that most of the attendees at the gala were in finance or had at least written their CFA exam.
They’d adopted the terms longing and shorting for dating. If they liked someone, they “longed” him; if they didn’t, they “shorted” him.
The blog entry caught the attention of Globe and Mail editor Carol Toller and ended up being a short piece in the Our Town section in January 2004. This appearance gave it considerably more exposure, and for the next little while, I was approached by a number of friends and readers who suggested that I write an article explaining longing and shorting. I thought it was a good idea, and it sat in my “things to blog about” list for the next five years.
With the recent events on Wall Street, most notably the current ban on short selling shares of specific financial institutions, I thought that now might be a good time to take that article off the “to do” list and make it real.
This is the form of investing that makes intuitive sense. In longing, a.k.a. “buying long” or “going long”, you buy shares in a stock that you think will go up in value. At some later time, you sell them for more than you paid for them, and thus you make a profit.
Once more, with feeling:
The concept is so simple that I’m pretty sure that you already knew what longing was, even if you were unaware of the term.
It’s usually after this explanation of longing that people ask “Then how can you possibly make money on a stock that loses value? You’d have to be on the Bizarro World!”
To which I’d answer: “Exactly.”
Superman comics in the 1950s and 1960s were full of some painfully, stool-softeningly dumb ideas. One of them was the Bizarro World, the home of imperfect duplicates of Superman and Lois Lane, where everything is backwards.
On the Bizarro World, you enter through the exit and exit through the entrance:
You demonstrate affection by throwing tantrums on Bizarro World:
You win Bizarro World races by coming in last place:
On one Superman comic, Bizarro bonds are shown to be selling like hotcakes because they’re guaranteed to go down in value.
Since everything is (somewhat inconsistently) backwards in the Bizarro World, you, as a Bizarro investor might try to “go long” in reverse order:
Believe it or not, that’s how shorting works.
Since the Bizarro World doesn’t exist, we’ll have to accept a couple of real world constraints.
The first is finding a way to sell shares you don’t own. In “regular” shorting (a.k.a. “covered” shorting), you borrow the shares from a broker who would typically have a lot of them and is willing to lend them out for a fee. (There is a way to sell shares you don’t own without first borrowing some. It’s called naked shorting and it’s the “extreme sports” of short selling.)
The second is to make sure that enough people in the market think that in the long term, the share value of the stock will go up. The broker keeps a pool of those stocks because s/he thinks that in the long term, they will appreciate. S/he’s happy to lend them out to short sellers who are planning to make money on the occasional dip in value, but believes that its price’s trend over time is upward.
And now, the basics of shorting, with special guest stars The Monopoly Guy and Mr. David Hasselhoff:
Now that you’ve got the basics of shorting, you can read about the details that I didn’t cover. Some good places to start are:
Found by Miss Fipi Lele, created by Lee Camp.
I absolutely love this clip:
Here’s a transcript of the last bit of the clip:
Colbert: When you see or hear things that are bad are going on in your church, you get up and you walk out! That’s what Catholics like me, and Papa Bear [his nickname for Bill O’Reilly] and Sean Hannity understand. You leave that church!
Unless it’s, you know, widespread decades-long rumours of sexual abuse. In that case, you gotta give it time. The church has its own processes; we don’t understand it!
The point is, all any Catholic pundits and Catholic politicans who may be criticizing Obama are saying is: “Do as we say, not as we didn’t”.
Update, May 13, 2008: The original video got yanked, but I’ve posted another copy in its place.
Here’s a great video that’s making the internet rounds: right-wing attack dog Bill O’Reilly, losing his cool and turning into an eight-year-old upon encountering the phrase “play us out”, a term that anyone who’s been in a TV studio at least a couple of times has encountered. Be warned, he bursts into a potty-mouthed temper tantrum and lets fly with the f-word:
This is from his days on the television news tabloid program Inside Edition, which he hosted from 1989 to 1995. I remember thinking that Inside Edition was about as trashy as television got, but that was well before The O’Reilly Factor.