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There is no difference - absolutely none - between the threat of conventional financial loss and the threat of total loss through termination. The fact that investors can take a haircut at any time doesn't stop them investing.

If it came to that, the staff at the credit rating agencies ana analysis shops could be retrained to take an interest in corporate ethics and to report on the ethical standing and likely survivability of a corp.

Think of it as a new kind of sustainability.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Sun May 23rd, 2010 at 03:51:12 AM EST
[ Parent ]
There is no difference - absolutely none - between the threat of conventional financial loss and the threat of total loss through termination. The fact that investors can take a haircut at any time doesn't stop them investing.

No, there is a vast, vast gulf of difference between risking the money you paid for the shares and risking joint and several liability for the every company activity.

The difference can be summed up in one sentence: Don't buy stock for money you can't afford to not see again.

If liability isn't capped at some level - and the price of the stock is a convenient, albeit not necessarily optimal, level, the stockholder would potentially put his solvency on the line when buying shares. Making more ways to have economic actors go insolvent does not strike me as a good way to enhance the stability of the economic system.

If it came to that, the staff at the credit rating agencies and analysis shops could be retrained to take an interest in corporate ethics and to report on the ethical standing and likely survivability of a corp.

Just to be perfectly clear, these are the same rating agencies and analysis shops that slapped AAA ratings on leveraged CDO-cubed derivatives based on subprime collateral, right?

I'd rather use a magic 8-ball to guide my investment decisions. Magic 8-balls don't charge commissions.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun May 23rd, 2010 at 06:49:06 AM EST
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