Free Republic
Browse · Search
News/Activism
Topics · Post Article

To: arthurus
It seems to be a call to Sharia finance. I.e. the old biblical/koranic admonition to neither be a lender or borrower.

And, some points he makes are just wrong.

If a company doubles its issue of stock certificates to raise cash, then the price of each outstanding share will be cut in half. If a sovereign money-printer doubles his currency base to pay his cronies, then the value of each currency unit will be cut in half.
The point about a country issuing money without any backing (fiat currency) is correct. The value of the currency will fall according to the amount issued.

But he or she is wrong about the company issuing new stock. If a company sells stock to double the outstanding amount of stock, the price of the stock does not fall. The stock is now backed by the original assets of the company + the newly received cash from the sale of stock.

Other examples also play fast and loose with numbers. For example, a house falls from $400K to $200K, and the choices are a sale at $125K or a partnership in a $200K house. If the best sale price is at $125K, that's the value of the house, not $200K.

2 posted on 12/03/2009 3:06:27 PM PST by slowhandluke (It's hard to be cynical enough in this age.)
[ Post Reply | Private Reply | To 1 | View Replies ]


To: slowhandluke

I was having difficulty following the numbers on this thing and wanted to hear from others.


3 posted on 12/03/2009 3:27:56 PM PST by arthurus ("If you don't believe in shooting abortionists, don't shoot an abortionist." -Ann C.)
[ Post Reply | Private Reply | To 2 | View Replies ]

Free Republic
Browse · Search
News/Activism
Topics · Post Article


FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson