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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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.
THE FRAUD THAT CRASHED AMERICA!
NO MORE YEARS TO REPUBLICAN CORRUPTION.
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.
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.
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