We’ve already talked about how banking deregulation contributed to the current debacle. Now comes a story from The Register which discusses how naked shorts might have caused as much of a problem for the big brokerage houses. What is particularly sad about the story is that there was at least one person who raised the red flag and wasn’t allowed to publish an editorial in the Wall Street Journal.
This raises yet another concern for me. For me, the Wall Street Journal has long been the paper of record, when it comes to financial news. I have never thought much of their editorials, as they always seem to get it wrong. When they clamor for regulation and beat their fists against the desk, the sound is just a bit hollow to me, having read their constant anti-regulation protests.
Now with the purchase of the paper by right-wing media tycoon Rupert Murdock, I expect things to get worse. The web site has certainly already deteriorated in its new redesign. This leaves another open question. If the Wall Street Journal is deteriorating, where can one find a good daily market news source that has some amount of decent analysis to go with? I’m stumped.
Another question: did banks have substantial numbers of naked shorts that contributed to this mess? Was the firewall between their investment and banking arms sufficient? Certainly the failure of WaMu and others leads one to think the answer is “no”.