Volkswagen Is the Most Valuable Company in the world and the Banks We Are All Bailing Out Are Down as a Result
If I had to give a prize to the craziest financial story of the year this one would win it. Look at what is going on right now. Morgan Stanley shares are down 26% and Goldman Sachs 11% because Volkswagen shares are up 90% today and up from 200 euros to 900 euros in the last 2 days. Indeed Volkswagen was today the most valuable corporation in the world. It is worth now $353 bn or 100 times more than GM and 12 times more than Boeing. All this when the car industry is suffering from a serious recession already.
How did the share price go up like this? It got there by squeezing the banks and hedge funds who were massively shorting the stock against a tiny free float. It got there thanks to Porsche SE who wants to buy it and was on the other side of the short trades buying an enormous amounts of options a move that is being widely criticized. This type of car industry consolidation should be good news. With the economy the way it is it is clear why a luxury car company like Porsche may want to buy the "people´s car company". In the years ahead Beetles should outnumber Boxers in the streets of the major cities around the world. But the problem is that now, the "banks r us", all of us taxpayers. And when the banks lose we all lose. Can somebody please stop the traders gambling with our money? Can´t we effectively link bailout plans to effective deleveraging and compensation controls?
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This is by far the best, a great turn of events, not a crisis.
First, "Banks" are not in trouble by VW trading, it is Investment Banks/Brokerage Firms and
Hedge Funds. These are the ones that have been raiding companies stock, taking them over
then "rightsizing" them and "downsizing" career workers and "outsourcing", all at the same time
using the "downsized" workers "savings" in the banks to "Do It", while they live lavishly.
Any 'real" loans from Banks to Hedge Funds/Brokers can be paid by the liquidators in bankruptcy.
REPUBLICANS WHO DON'T WANT TO GOVERN DECENTLY --JUST TO STEAL! !-- ARE
THE FRAUD THAT CRASHED AMERICA!
NO MORE YEARS TO REPUBLICAN CORRUPTION.
This was a political and financial payback from Europe. This was the trigger that will squash short-selling altogether. Also, we don't know if a big U.S. bank renege on a huge loan or line of credit so Porshe took the next best option which would be to buy up Volkswagen and at the end of the day be the most valued company in the world. Now the banks will have to scramble back to them hat in hand to reestablish whatever relationship remains. As well this is what happens when you have been telling foreign countries kiss off for 8 years, they will not help you when you really need it. What goes around comes around. Karma. We are receiving all of the bad will that the powers that be have been passing around for 8 years.
Erdgeist -
Australia banned naked short selling and maintained historical controls over its banks. It is in a better situation than almost every other OECD country as a result, although it is dangerously exposed to any future minerals downturn in China.
Naked short selling and the removal of the traditional "uptick rule" established in 1934 was the fuse and the match to the financial unregulated dynamite that blew up Wall Street.
Maybe part of it is Brooke Shields, still working it at 43 after 2 kids!
Nice compensation for all that toxic debt with a so-called AAA rating those same US banks sold to Europe?
there is no indication that there was naked shortselling. so whats the problem
True, could just be investors. The day the stock market took its heaviest dive, I purchased KO (people need it to mix drinks with during hard times), ATT (people need to talk about their problems), MSFT (people need to blog about their problems), and the long shot, GM (the gov't will bail them out and they will get with the program and make affordable alt fuel cars for everyone)!!! I'm not looking to short trade or cash in early. These were just stocks I always wanted and could never afford. Now I have a few shares of each and if they survive over the next 15 years I'll have a little bit of cash to celebrate my pension retirement (not 401k based) with a nice cruise.... If not, I'm out 1500. Not big bucks, and no fast and loose nor short trading. But I wouldn't take anything in the financial sector right now for any reason... a lot of people probably feel that way.
After this horrid calamity and they are still short selling ?
The world is nothing but a rigged casino. AND THEY ARE PLAYING WITH OUR MONEY!
The rules better be changed fast or we will never dig our way out of this mess.
If you really want to know what precipitated the present crisis just look at the synopsis below regarding the repeal of Glass-Steagall. Fed Chairman Paul Voelker tried to prevent it, but was outvoted by his own committee. the link to full article below.
In the spring of 1987, the Federal Reserve Board votes 3-2 in favor of easing regulations under Glass-Steagall Act, overriding the opposition of Chairman Paul Volcker. The vote comes after the Fed Board hears proposals from Citicorp, J.P. Morgan and Bankers Trust advocating the loosening of Glass-Steagall restrictions to allow banks to handle several underwriting businesses, including commercial paper, municipal revenue bonds, and mortgage-backed securities. Volcker expresses his fear that lenders will recklessly lower loan standards in pursuit of lucrative securities offerings and market bad loans to the public.
In the 1997-98 election cycle, the finance, insurance, and real estate industries (known as the FIRE sector), spends more than $200 million on lobbying and makes more than $150 million in political donations. Campaign contributions are targeted to members of Congressional banking committees and other committees with direct jurisdiction over financial services legislation.
On Oct. 22, 1999, after 12 attempts in 25 years, Congress finally repeals Glass-Steagall, rewarding financial companies for more than 20 years and $300 million worth of lobbying efforts. Supporters hail the change as the long-overdue demise of a Depression-era relic.
http://www.pbs.org/wgbh/pages/frontline/shows/wallstreet/weill/demise.html
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