Memo to European “Finance Ministers” or “Directors of Monies” or “Dutchesses of the Royal Treasury”:
The absolute WORST thing you can do when you’re in trouble is blame the shorts.
I’m starting to see articles planted left and right, laden with anonymous sources, that attempt to shift the focus of the Euro sovereign debt crisis to an exposé of evil speculators. Goldman Sachs this, George Soros that, John Paulson the other thing.
‘Blame The Shorts’ is the oldest and faultiest play in the Desperation Playbook. Don’t believe me? Go ask ex-Lehman CEO Dick Fuld how things went after his public proclamations about “burning the shorts”. Go ask ex-SEC head Chris Cox how the financial sector fared in the immediate aftermath of his short-sale ban?
There are no puppeteers pulling the strings behind the slow-motion reckoning now rippling across European bourses – just huge, unsustainable debt loads and entitlement-suckers who refuse to view the “Account Balance” screen on their national ATM.
In short, Europe, you may be displeased with the fact that certain hedge funds and traders are seeking to profit from your misery, but they certainly cannot be said to have caused it in the first place. Consider:
- George Soros didn’t tell the quasi state-run banks of Spain to be vigorous participants in a Florida-esque building orgy. Nor did he tell them to conceal a great deal of their losses as unemployment rates made it obvious to the populace that there was ugliness beneath the surface.
- Goldman Sachs didn’t ask Greece to become a union-dominated, inside-out dystopia where institutions that should be government-run were privatized while the government itself became a competitive force within the enterprise markets of many industries.
So please, blame it on the rain, blame it on Rio, blame Canada – but DON’T blame the shorts. It never works and scares the hell out of constructive market participants whose trust and respect you are in dire need of right now.