This story is a few days old, but a great read;
On Tuesday, March 11th, 2008, somebody — nobody knows who — made one of the craziest bets Wall Street has ever seen. The mystery figure spent $1.7 million on a series of options, gambling that shares in the venerable investment bank Bear Stearns would lose more than half their value in nine days or less. It was madness — “like buying 1.7 million lottery tickets,” according to one financial analyst.
But what’s even crazier is that the bet paid.
At the close of business that afternoon, Bear Stearns was trading at $62.97. At that point, whoever made the gamble owned the right to sell huge bundles of Bear stock, at $30 and $25, on or before March 20th. In order for the bet to pay, Bear would have to fall harder and faster than any Wall Street brokerage in history.
The very next day, March 12th, Bear went into free fall. By the end of the week, the firm had lost virtually all of its cash and was clinging to promises of state aid; by the weekend, it was being knocked to its knees by the Fed and the Treasury, and forced at the barrel of a shotgun to sell itself to JPMorgan Chase (which had been given $29 billion in public money to marry its hunchbacked new bride) at the humiliating price of … $2 a share. Whoever bought those options on March 11th woke up on the morning of March 17th having made 159 times his money, or roughly $270 million. This trader was either the luckiest guy in the world, the smartest son of a bitch ever or…
It is stuff like this that makes you wonder if we all wouldn’t be better off if we just let the entire country go bankrupt as we migrate towards a Mad Maxesque society.
Disgusting.
Don’t you wish the SD media, er, public relations industry, would tell us how many of our tax dollar investments went up in collaterized debt obligations smoke? Retirement fund? Education funds? etc. It’s such a painless way to raise taxes.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aBarSkIcch2k
There are all kinds of financial instruments, trades and positions investment banks can take that we regular folks (and the SEC) know little to nothing about. The people who think of them get paid huge bonuses.
We need Teddy Roosevelt’s axe to chop up the big financials long before they get “too big to fail”.
What is exactly so disgusting about this? These types of transactions are zero sum. In other words, someone wins and someone loses vis a vis whatever bet is placed.
George Soros has done the exact same thing with currency markets around the globe. Except that most times when he wins, the 3rd world country’s central bank whose currency he’s manipulating comes out losing and losing big time.
In this case it was most likely some other trader who lost, and those guys know the game and it’s consequences. Soros on the other hand, typically walks away with a billion dollar profit that further cripples an already screwed up country. To which he turns around and donates to anyone who’s against GW Bush or the Republican party.
So, my liberal friends, if you’re truly outraged by this, you need to take a much harder look at the funds you guys rode to victory with in the last two elections.
Yes of course it is a logical conclusion to jump from people manipulating the markets to essentially force a firm into bankruptcy which then sends our economy into a death spiral for personal economic gain based upon loopholes and naked short sales to that of a liberal political financier.
STFU Sy.
George Soros has done the exact same thing with currency markets around the globe. Except that most times when he wins, the 3rd world country’s central bank whose currency he’s manipulating comes out losing and losing big time.
I doubt you’ll find anyone here who will defend George Soros. The man is a hypocrite who makes money artificially manipulating currencies at the expese of millions of people.
Costner:
“Blah, blah…STFU Sy”
1. No one person, nor investor forced Bear Stearns into bankruptcy. That is a jump only a moron who has no clue about Wall Street would make.
2. No one firm collapsed the entire system, again an assumption the Economically ignorant would argue.
3. What are the these “loopholes” you speak of?
4. Personal economic gain? From someone on Wall Street no less, shocking.
GSABFD Costner.
1. No one person, nor investor forced Bear Stearns into bankruptcy. That is a jump only a moron who has no clue about Wall Street would make.
Great – but I (nor anyone else here) made such a suggestion. You may take note that “people” is a plural term whereas “person” is singular.
2. No one firm collapsed the entire system, again an assumption the Economically ignorant would argue.
Actually some have argued the AIG debacle did in fact collapse our system, but I’m not about to jump quite that far. I realize there were many factors involved and many firms.
3. What are the these “loopholes†you speak of?
Perhaps you should read the article that started this conversation before posting.
4. Personal economic gain? From someone on Wall Street no less, shocking.
There is a differece between personal economic gain, and personal economic gain based upon shady practices knowing full well it can and will result in dramatic negative impacts to the economy. Again read the article before posting.
GSABFD Costner.
Stay classy buddy.
Here’s how rumors get started:
It was Bernie Madoff. His pyramid had no real money so he made his own news then churned some paper for a real profit. It’s in banks in the Cayman’s, Bahamas, Columbia, Brazil, and Switzerland. His prison break will be sensational. He’ll use his own military and make another billion from the movie rights.
Madoff spent something like $37 million on hookers, coke, booze, and parties.
The rest he squandered.
37 million will be like 100 million soon. Maybe Madoff also knew when to spend. I’m sure there’s money hidden. It’s to much and to easy to hide overseas. It’s also to hard to prove and to hard to recover.