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"A righteous person would say that making money off the back of a global pandemic is at best opportunistic and at worst downright immoral—that the ghoulish deus

by mrwh 6y ago

"A righteous person would say that making money off the back of a global pandemic is at best opportunistic and at worst downright immoral—that the ghoulish deus ex machina that made short-sellers rich included hundreds of thousands of people dying and widespread economic devastation" Well, indeed.

Pyramus 6y ago
That quote makes it seem like the short sellers were betting on economic downturn due to Covid, which they didn't. The trade was made long before in 2018/19 and the economic pressure due to Covid was a lucky coincidence that acted in their favor. It's not like the CFDs in the article would have stayed up if they hadn't made the trade or made it long. > "COVID-19 also revealed a dirty secret hidden in the crawlspace upon which many commercial mortgage-backed securities were built. A University of Texas at Austin study published in August claimed that banks knowingly inflated underwriting income for $650 billion worth of commercial real estate mortgages issued between 2013 and 2019, including by 5 percent or more for nearly a third of the roughly 40,000 loans. “A well-documented historical pattern is that fraud thrives in boom periods and is revealed in busts,” the university researchers wrote, adding that end investors were unaware of this hidden risk, a deception akin to buying a Ferrari secretly outfitted with a rusted-out Kia engine. It could be argued that CMBS had been a magic trick all along, with big banks one step ahead, luring investors to pick a card from a rigged deck. It took a global pandemic—an act of God—to reveal this financial sleight of hand." Isn't that the real scandal?
- onemiketwelve 6y ago
  Yes I agree. Thanks for pointing that out. I didn't expect cherry picking quotes here tbh
- stefan_ 6y ago
  So this was a vehicle to profit off the fraud? Unless you attach any weight to the dramatic writing chronicling their "original research" visits to malls.
ajsnigrutin 6y ago
I mean... earning money, by eg. doing remote services, delivering food, online training/fitness/.., etc. is a good, and still "ok" way to make money. Shorting on businesses, because of a global pandemic... yes, that's bad.
eru 6y ago
Demonising of short sellers is an old hat. It's just as silly today as it has ever been.
vishnugupta 6y ago
I don’t follow. Short sellers didn’t cause the pandemic did they? They worked to discover an information asymmetry and took a bet on it. The counter party was willing to accept their bet. As far as I see no one was coerced to do something they weren’t willing to do. It would have been immoral if they had done something to influence the outcome in their favor. Like lobbying the government against bailing out the landlords/bond-holders/originators. From what I read nothing of that sort happened. So why bring up morality? Is it a misplaced sense of jealousy? Or a case of sour grapes?

by mrwh 6y ago

Pyramus 6y ago

That quote makes it seem like the short sellers were betting on economic downturn due to Covid, which they didn't. The trade was made long before in 2018/19 and the economic pressure due to Covid was a lucky coincidence that acted in their favor. It's not like the CFDs in the article would have stayed up if they hadn't made the trade or made it long. > "COVID-19 also revealed a dirty secret hidden in the crawlspace upon which many commercial mortgage-backed securities were built. A University of Texas at Austin study published in August claimed that banks knowingly inflated underwriting income for $650 billion worth of commercial real estate mortgages issued between 2013 and 2019, including by 5 percent or more for nearly a third of the roughly 40,000 loans. “A well-documented historical pattern is that fraud thrives in boom periods and is revealed in busts,” the university researchers wrote, adding that end investors were unaware of this hidden risk, a deception akin to buying a Ferrari secretly outfitted with a rusted-out Kia engine. It could be argued that CMBS had been a magic trick all along, with big banks one step ahead, luring investors to pick a card from a rigged deck. It took a global pandemic—an act of God—to reveal this financial sleight of hand." Isn't that the real scandal?

onemiketwelve 6y ago
Yes I agree. Thanks for pointing that out. I didn't expect cherry picking quotes here tbh
stefan_ 6y ago
So this was a vehicle to profit off the fraud? Unless you attach any weight to the dramatic writing chronicling their "original research" visits to malls.

ajsnigrutin 6y ago

I mean... earning money, by eg. doing remote services, delivering food, online training/fitness/.., etc. is a good, and still "ok" way to make money. Shorting on businesses, because of a global pandemic... yes, that's bad.

eru 6y ago

Demonising of short sellers is an old hat. It's just as silly today as it has ever been.

vishnugupta 6y ago

I don’t follow. Short sellers didn’t cause the pandemic did they? They worked to discover an information asymmetry and took a bet on it. The counter party was willing to accept their bet. As far as I see no one was coerced to do something they weren’t willing to do. It would have been immoral if they had done something to influence the outcome in their favor. Like lobbying the government against bailing out the landlords/bond-holders/originators. From what I read nothing of that sort happened. So why bring up morality? Is it a misplaced sense of jealousy? Or a case of sour grapes?