Over-borrowing leads to stock market speculation & instability

[Panich52]

David Cay Johnston argues “better government” is the antidote to stock market jitters.

“Monday’s sudden stock market drops from Beijing to New York simply reflect the leverage of high-speed traders, many buying shares with $30 of borrowed money for every $1 of equity. With that much leverage, panic easily sets in when stock prices become volatile. … This scenario is entirely preventable: If the government limited stock trades to ban or minimize borrowed money, there would be less speculation and less instability. In the long term, stock prices would move in greater accord with the profits and expected profits of each company.”

http://america.aljazeera.com/opinions/2015/8/the-antidote-to-economic-anxiety-is-better-government.html