Hedge funds are starting up another rumor now that Morgan
Stanley and two other firms were being "short squeezed" with their
investment into Volkswagen.
Goldman Sachs, one of the named, declined to comment,
but people inside the company said it had no Volkswagen losses.
Morgan Stanley spokesman Mark Lake said frankly that company has no
exposure to the automaker. SocGen, the third victim of the
rumor, could not immediately be reached, but earlier Tuesday
said it was sticking with its third-quarter earnings forecast.
Speculation that banks were caught in a "short squeeze"
involving Volkswagen fanned worries about the industry's ability to
weather a credit crisis that has led to the demise of several large
financial companies and has prompted government interventions
worldwide to avert a financial system collapse.
However, at this point, governments have likely still failed to
understand a primary source of this worldwide collapse: short term
minded hedge fund managers who are trying - and often succeeding -
in taking down companies for profit. They do it through
analysts. They do it through journalists. They do it by
abusing the system of short selling in America.
Meanwhile, Morgan Stanley stock has collapsed once again and
there is no doubt in this writer's mind that there is a widespread
effort to profit off of another "failure."
Unfortunately, it's less a failure of Morgan Stanley and others,
and more a failure of the Securities and Exchange Commission, the
exchanges and a media that still doesn't understand the
problem.