Slim Posted September 17, 2008 Share Posted September 17, 2008 There has been a definate change in the last three days from hopeful optimism to total panic. HBOS is being taken over by Lloyds, 4 weeks time from now Lloyds shareprice will get shorted to shit and the same will happen to them. Its unregulated hedge fund activity causing all of this and the government (in the UK) failed to rein these funds in properly years ago. The unscrupulous are making millions of the back of the fears of the average guy who is worried about his bank deposit. Its sick, its opportunistic, and its downright wrong. Note the rule change on shorting in the US with effect from tomorrow? If this is purely down to hedge fund activity, why are the funds performing so badly? Might be a bit late for MS and Goldman Sachs, they got hit pretty hard today. End of investment banking? Link to comment Share on other sites More sharing options...
Chinahand Posted September 17, 2008 Share Posted September 17, 2008 Someone posted a link to a You tube video a while ago that explains the way the banking system works in laymans terms. I wanted to send it to my nephew who's getting to that age where he's interested in the news. Anyone help with the link as I can't find it. Cheers. I can't remember this, if anyone does post it up, I'd be interested. I went on Youtube and had a look - thousands of videos all about conspiracies and the Fed taking over the world and how we must bring back the Gold Standard. If you want to see what I think about such things I blogged my criticisms about a pretty representative example here! These are are a few which I thought worth sharing. The Old and Cheesey - what banks do The Bit Complex - how banks create money - how banks create money 2 - also how they destroy it. - More money creation! - how the central bank changes interest rates. Tell us which ones you like or otherwise! Link to comment Share on other sites More sharing options...
thesultanofsheight Posted September 17, 2008 Share Posted September 17, 2008 Note the rule change on shorting in the US with effect from tomorrow? If this is purely down to hedge fund activity, why are the funds performing so badly? Might be a bit late for MS and Goldman Sachs, they got hit pretty hard today. End of investment banking? Its too little too late. Not all funds post results (or are obliged to) so this is the work of the more secretive funds going for gold. If you remember Soro's virtually broke the Bank of England in '92 - all you need is to be able to make big bets quietly. London should ban all hedge activity too and make them register when they take a position in anything. Its shorting causing 80% of the problems we are seeing. Current circumstances are symptomatic of a total failure in regulation. Link to comment Share on other sites More sharing options...
Chinahand Posted September 17, 2008 Share Posted September 17, 2008 Shorting a stock which then goes up in value is a really really risky activity - far riskier than buying a stock that falls in value as you have to make margin calls for holding the stock short. Shorting allows traders to put in mechanisms to stop bubbles developing. I fully agree that regulators need more transparency over shorting, but out and out bans would seriously affect the market as it would stop traders being able to signal that they think a stock is overvalued. As I have consistently said markets need both buy and sell signals, and needs the people sending those signals to be informed about the market information available to them. I have not defended for one second people who did not understand CDO's taking the rating agencies word that they were correctly valued - that was literally suicidal and we are all reaping the reward for it. But knee jerk reactions entirely banning short selling would be disasterous - it takes away a large amount of market information. Let that information be publicly known, but don't ban the practice itself. Link to comment Share on other sites More sharing options...
Gladys Posted September 17, 2008 Share Posted September 17, 2008 Complete ignoramus in this area, but it does seem to me that the past 20 years has seen a market develop in trading paper which have nothing in reality underpinning them, other than an expectation - it is a modern day South Sea Bubble. As someone said above, it is a house of cards that has now collapsed. Unfortunately, the ordinary man in the street understands this so little but is greatly affected because we are all in the banking system somehow, either through mortgages or savings, and have little choice about it. So the banks are looking a bit rocky at the moment, what do you do, take it all out and put it in another bank, invest in Government bonds, or buy bullion? No matter which choice the risk is far beyond the ken of your average Joe, which makes this mess pretty awful. One good side, though, if the US keeps on propping up delinquent financial houses it will run out of cash to fund puppet governments overseas which will, perhaps, allow us all to sleep slightly easier. Perhaps the war on terrorism will be won through economic exigencies in the US rather than elsewhere! Link to comment Share on other sites More sharing options...
ai_Droid Posted September 18, 2008 Share Posted September 18, 2008 As I understand it, it's only naked shorting that's been banned, stopping shorting assets you haven't actually borrowed. This is a great graphic from the beeb showing the scale of the carnage: Link to comment Share on other sites More sharing options...
When Skies Are Grey Posted September 18, 2008 Author Share Posted September 18, 2008 FTSE seems to be recovering this morning following the Lloyds/HBOS announcement.... Somewhat worrying that the Govt will overlook normal monopolies/competition issues for short term security Its also somewhat worrying that the US Govt techcnically own AIG considering the various pies that AIG have their finger in. Link to comment Share on other sites More sharing options...
Chinahand Posted September 18, 2008 Share Posted September 18, 2008 As I understand it, it's only naked shorting that's been banned, stopping shorting assets you haven't actually borrowed. This is a great graphic from the beeb showing the scale of the carnage: That is a great graphic - though the comparision is slightly unfair - the GDP figure are the amount of NEW assets Kazakstan produced in 2007 (netted against depreciation of old assets), while the figures for the company are the value of all the assets they own no matter when when they were produced or bought - approximately its comparing profits to total assets. Kazakstan made a "profit" on its assets of $100 billion in 2007, Citigroup's (net) entire assets used to be valued at $270 billion and now they are thought to be worth $81.7 billion. Its not really comparing apples with apples. Still shows the carnage doesn't it! And I am certain that Citigroups CFO controls a budget considerably larger than Kazakstan's finance minister so it can be far to compare companies with governments in terms of their power. Link to comment Share on other sites More sharing options...
The Old Git Posted September 18, 2008 Share Posted September 18, 2008 Its also somewhat worrying that the US Govt techcnically own AIG considering the various pies that AIG have their finger in. Expect to see United players driving Hummers soon Link to comment Share on other sites More sharing options...
ai_Droid Posted September 18, 2008 Share Posted September 18, 2008 And I am certain that Citigroups CFO controls a budget considerably larger than Kazakstan's finance minister so it can be far to compare companies with governments in terms of their power. Yeah the GDP comparison is silly, but the other graphics are a clear indicator on how much of the value has gone. Link to comment Share on other sites More sharing options...
Lonan3 Posted September 18, 2008 Share Posted September 18, 2008 Its also somewhat worrying that the US Govt techcnically own AIG considering the various pies that AIG have their finger in. Expect to see United players driving Hummers soon Wasn't it a wonderful gesture for them to save the credibility of so many thousands of Man U shirts? Link to comment Share on other sites More sharing options...
Mutley Posted September 19, 2008 Share Posted September 19, 2008 http://www.youtube.com/watch?v=cy-fD78zyvI...feature=related This is the link. part 1 of 5 Link to comment Share on other sites More sharing options...
Sebrof Posted September 19, 2008 Share Posted September 19, 2008 Shorting allows traders to put in mechanisms to stop bubbles developing. Really? Doesn't seem to be a very reliable mechanism does it? We have had two massive bubbles in eight years. The whole justification for a free market banking system is that it allows businesses to raise capital efficiently, not that it allows parasites to make a fortune destroying jobs and wealth. Big changes are needed. S Link to comment Share on other sites More sharing options...
thesultanofsheight Posted September 19, 2008 Share Posted September 19, 2008 Shorting allows traders to put in mechanisms to stop bubbles developing. Really? Doesn't seem to be a very reliable mechanism does it? We have had two massive bubbles in eight years. Funny how extreme market movements stopped today as a ban on shorting 30 prominent stocks was introduced. I bet they shit themselves as they tried to close their exposure off and found they couldn't. Link to comment Share on other sites More sharing options...
Gladys Posted September 19, 2008 Share Posted September 19, 2008 Does the ban on short selling prevent you from closing off existing exposures or entering into new? If the ban itself creates an instability then it is not a good thing just at the moment, although I think the ban is right for new deals. Link to comment Share on other sites More sharing options...
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