Matt Taibbi's "Wall Street's Naked Swindle," which ran in the October 15 issue of Rolling Stone magazine, is a terrific expose of the corruption at the highest levels. Briefly, it appears that, back in March 2008, someone who attended the closed-door meeting among Treasury officials, the Fed and certain anointed big banks immediately bought $1.7 million dollars of put options on Bear Stearns stock, then trading at $63, with strike prices 50 and 60 percent lower and which were due to expire in nine days. Bear Stearns stock crashed when it became clear that the Fed and the Treasury, contrary to its policy with other, favored banks, would not support the company. Its stock crashed, and within six days, the put position was worth $270 million, netting the put buyer 159 times his money on "insider information" at the highest level. A lawyer formerly serving as senior counsel for the SEC expressed dismay that the SEC has somehow been unable to follow the money trail: "I've seen the SEC send agents overseas in a simple insider-trading case to investigate profits of maybe $2,000." Taibbi didn't say it, but everyday bureaucratic incompetence can hardly explain the SEC's inability to track down this person after nearly two years, nor the lack of insistence by the Senate Banking Committee, Congress or any other governing body that the trail be followed and the culprit be caught. Influence of powerful people in government, however, would explain it just fine. You can read the article at http://www.rollingstone.com/politics/story/30481512/wall streets naked swindle.
Thursday, November 19, 2009
Criminals among us
The folks at Elliott Wave International have been solid advertisers and partners with this blog for several years now. I try to respect their intellectual property rights out of a strong sense of loyalty and ethics, but today, I will stretch the concept of fair use a bit with a verbatim quote from today's Elliott Wave Theorist. I think the nature and importance of what follows sufficiently explains my motivation and hopefully will excuse my momentary departure from an otherwise strict adherence to respecting their proprietary content.