Financial fuckery thread

[PopeTom]

I've take this opportunity to short my first stock (Bank of America).

While I seem to be making money on that decision having actually done it I see the downside.  My profit has a maximum limit (ie company goes out of business and buying to cover costs $0) but limitless potential for loss.

Unfortunately I'm not allowed to do options trading yet beyond selling options for stocks I already own.

That sucks.  Weird that they will let you do something as risky as shortselling but won't let you buy a put.  If you could buy a cheap way-out-of-the-money call, then you could at least limit your potential loss if BAC turns around and goes to the moon.

I use E*Trade and they have four levels of options trading.  I'm at level 1.

I had to apply to be able to do any at all (I also had to apply to short sell).  But that was my initial idea.  Short the stock then purchase a call option to cover myself in the event that BoA increases in value. 

Thankfully the current state of the market along with BoA's own problems makes that seem unlikely at the moment.

[Cain]

Yeah, shorting BoA seems like a good idea right now...

[Precious Moments Zalgo]

Yeah, shorting BoA seems like a good idea right now...

Protecting yourself from unexpected upside also seems like a good idea.  You never know who is going to get a bailout at any given moment, and my congressman (Mel Watt) is a ranking member on the banking committee and is 100% owned by BofA.

[Cain]

Oh, eventually, sure, something will be done.  But the relative transparency of the American system means you'll see it coming and so can react accordingly.

[PopeTom]

Yeah, shorting BoA seems like a good idea right now...

Protecting yourself from unexpected upside also seems like a good idea.  You never know who is going to get a bailout at any given moment, and my congressman (Mel Watt) is a ranking member on the banking committee and is 100% owned by BofA.

As of the end of the day 8/10/2011 my shorting BoA has netted my a 30% return.  I'll probably bail soon as 30% seems pretty good to me.
It's now a matter of figuring out where to go next.

[BabylonHoruv]

Yeah, shorting BoA seems like a good idea right now...

Protecting yourself from unexpected upside also seems like a good idea.  You never know who is going to get a bailout at any given moment, and my congressman (Mel Watt) is a ranking member on the banking committee and is 100% owned by BofA.

As of the end of the day 8/10/2011 my shorting BoA has netted my a 30% return.  I'll probably bail soon as 30% seems pretty good to me.
It's now a matter of figuring out where to go next.

bitcoins!

[PopeTom]

Yeah, shorting BoA seems like a good idea right now...

Protecting yourself from unexpected upside also seems like a good idea.  You never know who is going to get a bailout at any given moment, and my congressman (Mel Watt) is a ranking member on the banking committee and is 100% owned by BofA.

As of the end of the day 8/10/2011 my shorting BoA has netted my a 30% return.  I'll probably bail soon as 30% seems pretty good to me.
It's now a matter of figuring out where to go next.

bitcoins!

Bitcoins seem too much like an elaborate joke being played on tech savvy (but not anything else savvy) Libertarians.

[Cain]

Markets are up again today. 

[Disco Pickle]

Markets are up again today. 

it hit 10,700 over night and with the people that would naturally step in and buy at that level to scrape a profit, Cisco also put out good news.

It's still only hovering around 11,000 which is about where it was on Monday.

[Adios]

I'm watching my CitiGroup stocks play yo-yo in just a $7.00 range. Over $30 a share right now. Glad I bought them at $2.60 a share.

[Cain]

Markets are up again today. 

it hit 10,700 over night and with the people that would naturally step in and buy at that level to scrape a profit, Cisco also put out good news.

It's still only hovering around 11,000 which is about where it was on Monday.

Yeah, it didn't seem a huge rise.  Still, shows the market is fairly volatile at the moment.

Also http://www.bbc.co.uk/news/technology-14489077

Trading in seven stocks listed on the Hong Kong stock exchange was suspended on Wednesday after a hacking attack.

The attack was aimed at a website run by the exchange used to tell traders about company announcements.

The site was shut and trading in seven firms due to make announcements via the website was suspended for half a day.

Shares in HSBC, Cathay Pacific, China Power International and the Hong Kong exchange itself were among those suspended.

[Disco Pickle]

Funny HSBC would be in on that.  Last news I read about them, they weren't looking so hot, even if they did just offload their US credit card business to Capital One.

[Cain]

Good commentary on Standard and Poors from my favourite dead French conspirator (after Talleyrand):

http://fearhonorinterest.wordpress.com/2011/08/10/how-many-divisions-does-standard-and-poors-have/

Elective power is the power a political community can voluntarily choose to use. The United States of America has a national debt for S&P to fret over because it elects to have a national debt. The United States elects to keep a national debt because it finds it convenient for nourishing a rentier class. The United States elects to spend money on its peculiar version of the Bismarckian welfare state because its designed popularity with its beneficiaries largely insulates it from its rentier critics. The United States elects to keep taxes low while spending at an ambitious clip because of the contingent collision of a sound bite and its political fallout.

Nothing about its national debt constrains the intrinsic power of the United States. While the passive frown against debt default embedded in America's English heritage mitigates against it, nothing about our national debt constrains the realizable power of the United States. This nation could, at any time, elect to fully or selectively default on its debt. It could do something peculiar like minting a 14 trillion dollar coin to pay down its debt. America's current creditors (foreign and domestic) lack the intrinsic or realizable power to force the United States to pay them the face value of their Treasuries.

If the U.S. chose to become a deadbeat, it'd become a deadbeat with nuclear weapons. Russia was a deadbeat with nuclear weapons in 1998. One a more rentier friendly investment climate was ushered in through Putin's "dictatorship of law" ("Even when you're trying to be good you're evil!", Lisa Simpson complained to Mr. Burns). Russia even went through the ritual of "paying off its debt". Investor money flooded back in. There's nothing as irrational as an investor looking for yield, as Latin American countries repeated cycles of borrowing, default, forgiveness, and borrowing again reveals.

S&P's divisions are those of the imagination. Their power to conquer exits only inasmuch as the American political community elects to give them the power to conquer. If you stop believing in ratings agencies, they fade away, like fairies, Smurfs, or the Matrix sequels.

Make no mistake. Government is violence. Money is a claim on a share of the spoils of current government violence. Bonds are a claim on a share of the spoils of future government violence. As long as the United States of America has the power to wheedle (at best) or coerce (at worst) the spoils of realizable power from members of its political community, it can't go bankrupt and it can't be driven into austerity against its will. If the United States chooses to keep its magical printing press, it cannot run out of money: its currency is backed by the full faith and credit of the threat and use of violence.

There is no comparison between a household balance sheet and the "balance sheet" of a truly sovereign political community. If you're not a ruling dynasty, Mafia family, or family dominated corporate board, your family will rarely have the ability to coerce funds from your neighbors. If you can shake down the Joneses next door, congratulations. You have the makings of a sovereign state. Install a printing press in your basement and enjoy the blessings of your own currency. You can't compare apples and oranges when the apple is a fire-breathing Great White shark with high voltage razor-sharp teeth.

The balance sheet of the United States is a elective and self-imposed accounting identity, not an external and material check on its power. There may be utility in maintaining rituals and pieties that mask the ugly reality that government is ultimately based on command of a preponderance of violence within a discrete chunk of territory. However, the consent of the governed is based on the governed's ability to coerce their rulers, whether by active resistance or (more realistically) triggering an élite split that leads one faction of a ruling élite to sick its share of a political communities means of coercion against another faction.

The naïve realist follows the mythical Galileo in choosing to bow down before the reality of the world and feel its power with his bare outstretched palms. But he differs from Galileo in declaring that power does not move. It remains stationary at the center of the universe of human action. Here the naïve realist shows his true colors, those of an absolutist for the status quo.

And yet it does move.

Human power does rotate on its axis. Man, a technology-mediated monkey whose biological and cultural evolution is enabled and constrained by the power of his tools, is a protean creature just a little lower than the angels. His elective power can shift realizable power and his realizable power can shift intrinsic power. Intrinsic power fences his realizable power and gelds his elective power but fencing and gelding can shift, for good and for ill. The shift can be long, drawn out, and indiscernible. It can be short, sudden, and violently overt.

Stability is a virtue but not if it allows kindling to imperceptibly build in the shadows of the current world order, kindling that only awaits the right spark to burst into flames. Rearranging chairs on the world scene to try band-aid the ever-expanding gash in its hull only brings the day of inferno closer. In one world S&P is a power. In another world it's low yield fuel for the flames. Ratings downgrades that merely needle the rough beast, its hour come at last, only annoy it as it slouches toward Bethlehem to be born.

[Cain]

US is investigating Standard and Poors, according to a headline on Russia Today.

Looking for more information....

http://www.telegraph.co.uk/finance/financialcrisis/8699245/SandP-faces-inquiry-over-US-downgrade.html

Regulators are examining the models used by Standard & Poor's after the US government accused the ratings agency of a $2 trillion (£1.2 trillion) error when it downgraded America.

The SEC is also said to be looking at who knew about the decision to cut the rating before it was made public.

The inquiry is reported to be part of a broader look at McGraw-Hill, S&P's parent company, by the Securities and Exchange Commission.

S&P's decision to strip the US of its AAA rating late on the evening of August 5 prompted a furious exchange between the US Treasury and the agency.

The Treasury, which had been sent S&P's press release on the afternoon of the 5th before it was due to be released later that day, accused analysts at S&P of a "basic math error" that led to the downgrade.

The SEC is also said to be looking at who knew about the decision to cut the rating before it was made public amid speculation that it was leaked earlier in the day.

A spokesman for S&P said the company's policies "prohibit analysts or rating-committee members from trading and holding securities or options of the companies or governments they rate".

Although many investors had expected S&P to cut its rating, the decision contributed to a second week of volatile trading in stock markets across the world. It also led to speculation that other countries could follow.

[Cain]

http://rt.com/news/finance-war-usa-banks/

Following the loss of the US's triple-A credit score which sparked sell-offs on global markets, a new war using financial derivatives has been waged, which by no means can bear the name of WWIII, financial analyst Max Keiser told RT.

­Investors however remain unconvinced the country's finances are solid enough. Problems in the Eurozone will be up for discussion by the French and German leaders next week.

Max Keiser, financial analyst and host of the Keiser Report on RT, said French banks are now loaded with toxic derivatives that were sold to them by US investment banks.

"The US investment banks and the rating agencies are now attacking these French banks. They know where the bodies are buried, and they are using the weapons they sold them to attack them," he said. "The rating will be downgraded again. This is part of a new era on Wall Street – they go after sovereign debt. Wall Street and rating agencies are working together to destabilize the sovereign debt of these countries," he added.

Emphasis mine.  If the SEC investigation above does get anywhere, I bet if you look at the patterns of behaviour in relation to other sovereign debt downgrades, you would likely find similar instances of "insider trading".

Wall Street and the ratings agencies worked hand in hand to sell the world toxic subprime debts, so why should they stop doing so now?