Something Is Rotten in the State of Denmark

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Amid all the head scratching and hand wringing in yesterday's Morgan Stanley crisis review piece in the Wall Street Journal, an interesting series of data points seem to have largely gone unnoticed. They are here:

You will notice that the lethally dangerous brew of frozen, toxic evil concentrate that is short selling delivers a blow reminiscent of the impact made by a down pillow during a teenage girl's slumber party. The stock opens at $22.83, that price having been set by the market way before a slew of short selling and already down from the prior day's close of $28.70. From there, and despite taking what looks like rather significant short volume all day, peaking at 500,000 shares sold short per minute just before the lunch hour but hitting 300,000 shares per minute again by the close, it closes at $21.75. Even the massive spike and the consistent 200,000 shares short per minute rate in the hour before lunch only pulls the stock from $23-$24ish down to $18 or so. On top of this, during the last two hours of trading, which saw the most sustained short selling volume for the day, the stock recovered from $17ish to $21ish.
So, on what frantic anti-short parties insist is the worst most manipulation-laden day the stock had seen and when the stock was supposedly most vulnerable to rumor and innuendo, this is the best short selling could do? This is the evil bear raid tool we are supposed to be terrified of? Not only had the damage already been done (and not by short selling or even the $25 billion Deutsche Bank credit line revocation rumor) but the stock was essentially flat compared to the prior day's open, which was $23.89.
But none of that matters. Nor does the fact that the firm alienated and lost so many of its cash rich hedge fund clients by scape-goating them, and required $9 billion in equity followed by another $10 billion from the government. It was the evil shorts who killed Morgan Stanley. Right?
Anatomy of the Morgan Stanley Panic [The Wall Street Journal]

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