Big

Apparently, if you borrowed shares of mortgage investments and sold them, then waited for shares to decline in values and bought them back at a lower price and returned them you could pocket billions of $$$, which is exactly what is called "shorting" and a group of billionaires did just that.

Can you imagine the monstrocity of betting that the mortgage market will collapse, people will lose homes, and you will become rich. Arghhhh....

Here is the story:

http://www.nytimes.com/2008/04/16/bu...hp&oref=slogin

Zapp Brannigan

People did the same thing before the Depression...actually, I think that's how Joe Kennedy (Father of JFK) made most of his money. Just the way the market works. Slimy? Sure, a little. But it's not like they caused the Great Depression or the mortgage bubble to burst.

__________________
"I've made it with a woman. Inform the men."

ODH

I always heard Joe Kennedy made his fortune bootlegging during prohibition.

matclone

I believe many fortunes have been made in America on speculation. John Bogle, author of the Battle for the Soul of Capitalism argued in a TV interview that the speculators (with specific reference to hedge fund managers) contribute nothing to the economy.

Amazon.com: The Battle for the Soul of Capitalism: John C....
Amazon.com: The Battle for the Soul of Capitalism: John C....

Big

Most of the time you also need wealth to build wealth in this kind of speculation because you can't borrow shares as far as I understand without putting something as a collateral in case you lose.

Flop The Nuts

You'll get a margin-call if there is a short-squeeze, and you can lose a lot of money. Depending on the size of your short, and how quickly the stock is going up, your portfolio can be sucked away in a brief period of time.

But, to answer your question, your collateral can be a line of credit.

Big

Can an average Joe get $$$billions in credit?

Flop The Nuts

No. A guy with an income of $50K a year isn't going to be able to make this kind of move.

r.payton@att.net

Joseph Kennedy Sr. once stated that ''America had been ruled by perhaps 50 families -and that is a high estimate .

I was once asked by a student what our economy was based upon and I immediately replied 'the gold standard '' which was a wrong answer since Nixon officially took us off the GS in the early seventies-The U.S. hasn't been on the GS since FDR confiscated all the gold held by the public -I have searched and searched yet the best answer I can come up with is -whatever the Federal Reserve Bank says .

skipster

Our monetary system is known as a fiat system. Our currency has value because the government has said so and we believe them. If one day, we decided not to believe them, our currency would be worthless. But, the US economy is so strong, even now, that moving away from the dollar is too costly to do.