Originally Posted by
Dayuhan
A financial firm's assets are in its investment portfolio. If the financial firm is stupid and has a portfolio full of hot air, it will deflate at the slightest puncture. The cause of the deflation is not the puncture, it's the gaseous nature of the portfolio. If the portfolio is solid, a puncture won't matter.
It is true that most US financial firms had pumped up their books with volumes of hot air, which left them insanely vulnerable. The eventual explosion has to be blamed on the decision chain that produced that vulnerability, not on the specific events that caused the deflation. Anyone running a financial firm should know there's a $#!tload of nails and needles out there and you will sooner or later brush up against them. If they pop your balloon, it's not the fault of the nails and needles, it's your fault for overinflating your company into a hot air balloon just to make it bigger.
Why do you figure short sellers targeted Lehman and Bear Stearns, and not, say, Wells Fargo?
Jackals prey on the weak. They aren't the cause of the weakness.
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