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August 21, 2008 8:23:22 AM CDT

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Demonizing Shorters Won't Save the Likes of Lehman

Posted Jul 19, 08 9:34 AM CDT in Glossies,  Business 

(Newser) – Short-sellers have the power to utterly crush Lehman Brothers, as they did Bear Stearns, writes James Cramer in New York, but it's largely Lehman's own fault. Lehman shares much of the "mismanagement, arrogance and recklessness" that brought down Bear, Cramer opines in a piece that says excoriating short-selling hedge funds for running down Lehman stock, and accusing them of manipulation, misses the point.

Lehman has no credible defense because it's been "hemorrhaging cash as it financed a horrid portfolio of toxic mortgage paper both from here and in Europe and doesn’t have a cent to retire stock; it’s too busy issuing more of the stuff." You can't stop money from either talking or walking, he writes; the best way to thwart the short-sellers is for firms to ensure they are honest and well-capitalized. Those will be the ones remaining when the market bounces back, and "the returns will come to those who bet with, not against, companies."

Source New York

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Lehman Brothers headquarters is shown Thursday, June 12, 2008 in New York.   (AP Photo/Mark Lennihan)
Traders Gregg Maloney, left, and Brian Fairbrother, both with Labranche and Company, work at computer terminals during early trading at the New York Stock Exchange, Thursday July 17, 2008.   (AP Photo)
Traders crowd the post that handles Visa on the floor of the New York Stock Exchange, Friday June 27, 2008.   (AP Photo/Richard Drew)
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Bear Stearns  • SEC  • hedge fund  • Lehman Brothers  • financial markets  • short selling


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