A tall story about short selling

Short selling? Isn't that flogging legwear you normally wear in the summer?
Not in this case, although it does seem to have caught people's attention in the same way that fashion fads do.
Short-selling is the practice by which City traders (usually working for so-called hedge funds) 'borrow' shares in a Stock Exchange company and sell them for, say £5 a piece, in the hope they'll be able to buy them back later for £4.50. They hand back the share to its owner and pocket the 50p they've made.
They do it because, having taken a look at a company's business, they believe the shares are likely to fall in value.
'Shorting', as it's known, has become controversial because some people think it is driving the price of bank shares down and making them more vulnerable to financial problems.
In other words, they accuse short-sellers of betting on everyone's misfortune.
The share price is an expression of a company's worth. If you add up the value of all of a company's shares you can say it is, for example, a £5 billion company.
That isn't just an idle boast: if a company is worth £5 billion then it becomes easier to raise substantial sums of money to invest in growth.
If, however, its share price and overall value is falling – may be because it hasn't been trading very well or because there are problems across the industry it operates in – then it reduces the company's room for financial maneouvre.
Shorting was banned in the autumn because the financial crisis meant nearly all share prices were falling – allowing traders who specialise in shorting to gorge on a falling stock market and push down prices in a dangerous downward spiral.
The Financial Services Authority lifted the ban last week and bank shares started to fall.
The conclusion drawn by some was that greedy share traders were at it again. But the evidence is that they played only a very small part in what has happened to some banks and that the jitters actually came from wider concerns that the banks might need another bailout because of losses they hadn't come clean about.
In other words, the shorting was a manifestation of trouble the banks were already in.
In any case, shorting is a natural counter-balance to another practice that leaves people high and dry: hyping shares so that they rise above the levels the true prospects for a Stock Exchange company say they should be at.
In this case, people are persuaded to buy shares in a business because of exagerrated claims about its performance, only to see the value fall soon after they've bought them.
That isn't betting on people's misfortune – it's creating it.
Neither of these practices is squeaky clean. But to suggest that hedge funds shorting shares are in some way responsible for the UK's economic misfortune is well wide of the mark.
In the eyes of some, bank bosses got there first.