Wall Street's Naked Swindle

[AllentownJake]

On Tuesday, March 11th, 2008, somebody — nobody knows who — made one of the craziest bets Wall Street has ever seen. The mystery figure spent $1.7 million on a series of options, gambling that shares in the venerable investment bank Bear Stearns would lose more than half their value in nine days or less. It was madness — "like buying 1.7 million lottery tickets," according to one financial analyst.

But what's even crazier is that the bet paid.

At the close of business that afternoon, Bear Stearns was trading at $62.97. At that point, whoever made the gamble owned the right to sell huge bundles of Bear stock, at $30 and $25, on or before March 20th. In order for the bet to pay, Bear would have to fall harder and faster than any Wall Street brokerage in history.

The very next day, March 12th, Bear went into free fall. By the end of the week, the firm had lost virtually all of its cash and was clinging to promises of state aid; by the weekend, it was being knocked to its knees by the Fed and the Treasury, and forced at the barrel of a shotgun to sell itself to JPMorgan Chase (which had been given $29 billion in public money to marry its hunchbacked new bride) at the humiliating price of … $2 a share. Whoever bought those options on March 11th woke up on the morning of March 17th having made 159 times his money, or roughly $270 million. This trader was either the luckiest guy in the world, the smartest son of a bitch ever or…

Or what? That this was a brazen case of insider manipulation was so obvious that even Sen. Chris Dodd, chairman of the pillow-soft-touch Senate Banking Committee, couldn't help but remark on it a few weeks later, when questioning Christopher Cox, the then-chief of the Securities and Exchange Commission. "I would hope that you're looking at this," Dodd said. "This kind of spike must have triggered some sort of bells and whistles at the SEC. This goes beyond rumors."

http://www.rollingstone.com/politics/story/30481512/wall_streets_naked_swindle/print

This article is absolutely a must for those who want to understand what has happened and what is happening.

[AllentownJake]

1. Kick, this is the Matt Taibbi article that shows the financial crisis

[Royal Sloan 09]

2. K & R nt

[inna]

3. thanks! bookmarked for later reading.

a couple of sentences that jumped out at me:

"Our burglar class now rules the national economy. And no one is trying to stop them."

[AllentownJake]

5. It is a fantastic read

I got the paper version a week ago.

[slipslidingaway]

4. knr n/t

[Ruby the Liberal]

6. I have been waiting for this gem.

Thank you!

[AllentownJake]

7. It is worth the wait

Absolutely essential read and nobody in government than or now comes off good.

[Ruby the Liberal]

12. Just finished reading it. Wow.

There are no words.

[BeHereNow]

8. Where's my torch and pitchfork...

It's time.
BHN

[AllentownJake]

9. Wait

They plan on another bullshit scam next year, probably in the first quarter after the bonuses are all paid out. They are going to start having cash flow problems and the Fed seriously has to stop printing them money at some point (people will notice their gas prices going up)

[Ruby the Liberal]

13. No shit.

:grr:

[tosh]

10. Thanks!

[anonymous171]

11. K&R Everyone must read this. nt

[HCE SuiGeneris]

14. Thanks Jake.

Great article.

[Stuart G]

15. Thanks for posting this.

[Divine Discontent]

16. KICK DU MUST READ, I CAME TO UPLOAD THIS IF SOMEONE HADN'T! KICK!

this is very important to read - the sheer amount of millions made off that chance bet is probably more cash than one can imagine before them - betting 1.7 million dollars that a giant firm is going to lose over 50% of it's value (it lost much more than that!) in the next 10 days is a giant 99.9 to 1 risk - and someone didn't just bet $50 on it, they bet 1 million, 700 thousand dollars!



READ IT AND PASS IT ON!
HUGEEEE KICK!

[Orwellian_Ghost]

17. Bump