Posted on 01/25/2008 8:13:51 PM PST by GovernmentShrinker
My liquid assets have been for all practical purposes “under the mattress” since July, and won’t be coming out any time soon. I’m watching the proceedings with morbid, but detached fascination. I expect that there will indeed be a lot to watch next week.
I think that is the most plausible.
Oh, pul-lease. X number of bankers are sleazeballs, not a doubt in the world of it, but politicians are (at least theoretically) SUPPOSED to be responsible in making financial decisions. Now, municipal gov'ts are supposed to have the remedy of a civil suit to cover their own staggering incompetence? What an overloaded crock of crap THAT notion is!
The notion of responsibility in city/county governments (remember Orange County going for more than a half-bil number several years ago) has, unfortunately, proven to be a pipe dream. Perhaps bankers shouldn't be allowed to offer ''investment'' (haha) products such as they have done, but whom would you trust as the arbiter of suitability? Other pols? Other bankers? In the real world, that's all you'd get to be presumptive judges of ''suitable'' investments for assorted political entities.
As long as ANY government isn't kept on the very shortest leash possible, with outright dismissal of the gov't employees, elected or appointed or bureaucratic as the FIRST level of punishment when they f--k up, you're going to continue to have these incidents, world without end.
These incidents all, every one of them, have two things in common: 1) cronyism, and 2) the gov't bozos ''in charge'' not having one single, simple effing clue about the ''investments'' they've made or would make.
I'm a professional trader, and, y'know what, I don't trade in mkts that I don't at least minimally understand. Why? It's MY capital, and, candidly, I don't wish to subject it to risks that are undefined or that I don't understand. If I should do so, I run the enormous (and unacceptable) personal risk of going broke.
Until a similar standard is applied to these losers in gov't, we'll all be paying THEIR losses, for just as long as we're sufficiently stupid not to put them in prison.
Trust bureaucrats and politicians to make sound investments? Geez.
What the hell are their constituents smoking? This way lies, if not madness, then very definitely stupendous losses on (too frequent) occasions.
Fortunately, we traders have some experience upon which to draw. It strikes as a well-considered idea to buy straddles (likely June) on 10-year futures and Long Gilt and Bunds. Nice thing about a straddle: the owner of one doesn't care whether the mkt in question rises or falls -- all he or she cares about is that the mkt in question moves a lot within a short time.
Given the current situation, I should say that that is an excellent wager in the principal Euro, US, and UK debt mkts.
Good trading to you!
Such power in the hands of a few men is frightening. an amount exceeding the net worth of a man like Bill Gates is wiped out at a key stroke, so to speak.
Food for thought. Thanks for the analysis.
Big Rock in the pond.
Hasn’t it become sort of a tradition for the world markets to stick it to our market during the MLK hoilday? It kind of clears up the loose ends from the end of the year.
“At the point that SG admits learning of the overexposure last Friday, liquidating the positions immediately would have only lost SG $1.5 Billion.”
Wonder how the projected 1.5B was calculated - slippage with that kind of size was included or not?
“The FED says they weren’t advised of this problem and it didn’t contribute to their decision. M”
No way in heck i believe the huge selloff in asia and europe early this week didn’t influence the 75bp rate cut in some fashion.
This certainly makes more sense than the ‘sub-prime insurer downgrade’ story, since that was public before market close last friday. Monday asian markets started selling off for no clear reason, but it certainly is apparent in retrospect why.
The fact this directly influenced either timing and/or size of the fed cut is just amazing. Every central bank in the world has to be pissed at SG and the French Government right now.
Ping!
The stock market is not in trouble because some bank liquidated securities in a very very liquid market. Why did India or other markets drop? The stock market was already going down, in case no one noticed because the economy relies upon expansion of debt for to finace current transactions, and expansion of debt is now very difficult because of the $100B plus loss in subprimes - in case someone is not keeping his eye on the ball. Furthermore, futures are a zero-sum game, a betting pool. For every dollar Societe General lost, there is another trader who made that dollar and closed out a winning down-side position by buying the future that he had previously sold. It is not as though someone borrowed money to build a 6,000 sq ft house that he cannot now sell for 1/2 the cost of construction - that is a real loss because it is a loss to the economy of labor and material.
No it isn't. This was on futures. Societe General lost. The counterparties (those who had sold short the contracts that this trader bought) won.
The specific men who pulled this stunt -- Bouton, Noyer, and no doubt a couple of others who's names and roles haven't made it into the spotlight yet -- have probably had their last taste of power.
But the “insurance” side of a counterparty hedged trade might be bogus. It might not be a “wash” but just billions down the hole.
The pols are incompetent sleazeballs no doubt. But the suits are also going to air in public what a bunch of sleazeballs the investment bankers also were.
Insurance fraud means jail.
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