well, asu, that's part of the problem. wamu was hiding their troubles..like every other bank. it's kinda sad, but one of the best skits i've seen on the crisis is explained in the dumbest form possible:
The Subprime Mortgage Primer
i am sure you understand the issue already, but this was about the best explanation i've seen and it's kinda funny.
But at any rate, what i see as a HUGE problem was the lack of transparency and honesty in the accounting departments. THAT needs to be changed more than anything. f**k this offshore cayman islands account stuff, and f**k this accounting snafus, you can't make a reasonable decision about the cost of a company when you aren't getting honest info. personally, part of me tells them all to fail for being so freaking blind, but i know that would cause a global catastrophe...but i still say f**Kem for being so stupid.
Overall, though, i'd say shorts or even your large investors/traders don't really control the price of a stock long term. Short term fluctuations, yes, but that creates liquidity. Otherwise, you'll have an issue of buying or selling a stock you want. overall, more often than not, the real value of a company is reflected in the stock price. wamu..perfect example. Obviously it wasn't worth the $34 it was selling at last year....