Is this the start of a new Great Depression?

Maybe, maybe not. I'm no expert. But this article is a bit ominous:

"In short sales," Shapiro explained, "you don't own the share you sell; instead you borrow it. Then you replace it when you cover the short. If you're right and the price has gone down, you replace it at a lower price, and the difference between what you sold it for and what price you replaced it at is your profit. The problem with a naked short is that you don't borrow the share you sell. You sell it without ever borrowing it. In effect, you invent a share."

If this is beginning to sound like a game of Monopoly built on fake money, that's because it is. By injecting so many invented shares into the market using naked shorting, hedge funds have not only created an economy in which they can manipulate the stocks of companies smaller than Microsoft and Wal-Mart, but they have also created a market in which there are more shares than actual stocks. And that's about as hyperreal as an economy can get.

Confused? You're not alone. This could simply be yet another correction, but if you walk down Bay Street (or Wall Street), it wouldn't be a bad idea to bring a good sturdy umbrella, just in case it starts raining brokers.

Edited to add: They just said on the radio that even though Canadian companies aren't seriously exposed to the subprime crisis directly, their stocks are falling because they're being sold by US hedge funds, who are trying to cover their losses from the crisis.

I should be upfront here and say that in a very small way, I contributed to the crisis. You see, a few years ago I worked for a call centre that dabbled briefly in selling subprime mortgages to American consumers. I hate to admit it now, but I was actually quite good at it.