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Archive for the 'Economics' Category
Stock Markets: VW speculations
How crazy the worldwide stock markets have become and how little effects the Trillion dollar packages, speeches and appeals of politicians had on the casino players could one more time be seen today in Germany.
Stocks of one of the worlds largest car makers, VW, rose more than 300 % with intraday peaks even higher – yes we mean it – more than three hundred percent. And some of the in-the-money call options have seen their prices increase of more than 27,000% (twenty seven thousand percent).
While car makers around the world tiptoeing along bankruptcy and demand forecasts for the next year(s) are at best catastrophic for some of them – BMW today stopped production for a few days in some of its factories and Daimler today announced that they will stop production for a few weeks later this year- the outlook for VW is anything but peachy as well.
It’s not fundamentals that are behind these price jumps, it’s plain speculation, the same casino plays like…
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Germany: Bank Robbers ante portas
There was a lot of hectic movement with governments around the world the last weeks to confine the disasters from betting / wild casino speculation within financial institutions. Approaches and road maps laid out (if any) are pointing to different directions even in the key G7 developed countries.
The U.S. – for example – first wanted to give absolute powers to the executive branch and the government – a move widely criticized and changed by the U.S. Congress in the debates following the first bailout plan.
France and the UK have taken another road and bailing out their banks by providing funds only against a collateral – meaning they are de-facto nationalizes key players in their finance industries. France even went a step further with President Sarkozy calling for the creation of national industry funds to stop the fire sales of key industrial players to overseas investors – an interesting step that found much applause with the European Parliament. If you think that further it…
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Financial Crisis: How to say good by in style
One of the big questions and one some of us are getting asked quite a few times these days is it already time to buy back or still better to wait was answered by a Californian hedge fund manager – Andrew Lahde – who made one of the biggest percentage profits of all time and bowed out of the business last Friday with a fierce attack on the “idiots” running big banks who were willing to take the other side of his bets.
He also demonstrated how to say good by in style (when you’ve made your profit).
Below a quote from the letter he sent out and published on the INet (link to full text below)…
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Financial Crisis 101: Why CDS could never work
Many still call or describe CDS (Credit Default Swaps) as a kind of insurance policy against credit risk to limit the risk of the lender. Well that might be so in their dreams or it has been used as a camouflage by the bankers to persuade the investors of the quality – or to mislead them on the lack of it – and suggest that there would be an underlying asset.
And that’s were all the problems start. To issue or construct a CDS there was never a requirement to actually being linked to, i.e. having provided or taken out the credit or having an contractual agreement with these two parties.
Everybody could issue CDS completely unregulated and unlimited. This is of course the reason for the incredible amounts being pushed around and it also provides the reason that – in rare cases CDS might have been an insurance against credit defaults – but in general these papers were only betting slips if certain events might occur most similar to betting on horses or dogs races.
If these instruments would have only been allowed to use for …
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Humor: Music videos about the Financial crisis
Four music videos on the banking crisis based on some all time classics – from Elton John’s Candles in the Wind / Bankers in the Wind to Billy Joel’s We Didn’t Start the Fire / Wall Street Meltdown
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GM: A look into the abyss
Today was a bad day at stock exchanges all around the world and it was potentially the worst day in stock market history for General Motors.
Already down about 80% from its trading range around USD 40 per share 12 months ago, the share price of the Detroit car maker today was shredded another 30% to around USD 4.7. The report from JD Powers published today that is expecting an “outright collapse” for the global auto industry in 2009 certainly did not help. And for that the writing was already on the wall when GM stopped production in some of its factories in Europe earlier this week (Today even BMW has announces a short production stop with one of his factories in the next weeks).
Let’s put these figures into perspective:
The last time GM was traded around USD 4.7 a share was in the 1950s when an average car sold for …
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