I'm not a big fan of capitalism, but if it's OK to borrow money¹ and buy stocks with the hope of profiting on their sale, then it's just as OK to borrow stock and sell it with the hope of profiting when you buy it back again. If there's a problem with short-sellers trash-talking perfectly sound companies, there's at least as much of a problem with investors overhyping unsound companies.
Remember the valentine's episode of Futurama? Bender is selling roses and when he knows that Fry is over a barrel he hikes the price incredibly saying that demand just skyrocketed.
I haven't seen the episode but from your summary it sounds like Bender is doing what economists call "rent-seeking", profiting from his monopoly power (if Bender didn't enjoy any monopoly power then Fry could have just bought roses from someone else). I don't see where Paulson was rent-seeking; he was buying and selling in a market where there were lots of other people going after the same securities.
¹...and of course with our fractional-reserve currency system, in a sense, the vast majority of money is borrowed money.
Remember the valentine's episode of Futurama? Bender is selling roses and when he knows that Fry is over a barrel he hikes the price incredibly saying that demand just skyrocketed.
I haven't seen the episode but from your summary it sounds like Bender is doing what economists call "rent-seeking", profiting from his monopoly power (if Bender didn't enjoy any monopoly power then Fry could have just bought roses from someone else). I don't see where Paulson was rent-seeking; he was buying and selling in a market where there were lots of other people going after the same securities.
¹...and of course with our fractional-reserve currency system, in a sense, the vast majority of money is borrowed money.