You've probably heard about the French trader who has managed to stash away $7 billion before going on the lam. What's the big deal with sticking it to some French bank for $7 billion?
This $7-billion loss by the French bank Societe Generale (SocGen) (EPA:GLE) might have caused the sharp plunge in some European stock markets on January 21 - which spurred the Federal Reserve to make an unprecedented emergency 75-basis-point rate cut on January 22.
One economist drew a correlation between the SocGen scandal and the Fed's decision to make the emergency rate cut.
"[W]hat's interesting is there are a lot of people who are saying it was the SocGen trader who caused the stock market to fall and that Ben Bernanke overreacted," Brian Wesbury, an economist for First Trust Advisors, L.P., said on CNBC's January 24 "Kudlow & Company," "These are by the way, a lot of the same people that said he hadn't acted fast enough, so this guy can't win and I really feel bad for Ben Bernanke right now. He's getting beat up when he shouldn't get beat up."
One of Bernanke's most vocal critics, who regularly rails against the Federal Reserve Board of Governors for not slashing interest rates, is Jim Cramer. But, Cramer hasn't been so vocal about the possibility this emergency rate cut was over-the-top in the wake of the SocGen scandal. Cramer has been willing to dole out criticism, especially about Wall Street Journal Federal Reserve reporter Greg Ip, for not conveying the true sentiment of the Fed in his reporting.
Wesbury has been a long-time critic of the Fed using interest rates to manipulate the economy. He said again on January 25 the Fed was spurred on by panic. But that panic was propagated by the media, and that definitely included CNBC loose-cannon Cramer.
"I don't want to defend necessarily these massive rate cuts," Wesbury said on CNBC's January 25 "The Call." "I don't think the economy is in as bad as shape as many people believe. But you know, it's kind of interesting we're blaming the Fed for panicking when I think it is the markets that panicked. Everybody who sold because SocGen was fixing their books also panicked. And so, in a sense, I think there is way too much panic."
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update it's $70b!
January 25, 2008 - 21:10 ET by NortoCBS reported tonight this is the new figure and probably caused the black monday and not the US economy, will it get reported that way, guessss!
Bernanke is worried times 10
January 25, 2008 - 21:31 ET by Lame CherryThe problems Bernanke is facing due to Greenspans spinning a web of increasing inflationary debt causing the current stagnation of production with hyper inflation due to cartels gleaning billions off of housing balloons meant to soak up money they were printing to ward off a worldwide depression is a spiral catching all of us.
America is in a constriced economy. Thee WORST thing that is being done is cutting interest rates as that drives money out of banks........the very banks in need of cash reserves due to the bad housing loans they were forced to make to generate this false improvement America has had since 9 11.
The problem though no one is going public with is the hedge markets as they have driven commodities, driven up inflation and when one couples with it the over inflated hyper inflation and the shrinking dollar..........the entire high stakes poker game will bust one way or the other. America is about to loose even bigger than we ever believed.
I was talking to a checker today at a grocery as we were discussing the mango. I was center of the food market attention as we bantered in her telling me some poor old woman was weighing grapes earlier and had 2 handfuls costing 9 DOLLARS.
My mango from Peru was on sale for 78 cents as no one buys the mango as no one knows what it was. The South American fruits though fuel American diets in the winter. The descending dollar now is making those fruits 3 times more expensive.....so 3 dollar grapes cost 9 dollars now.
So what does the mango have to do with crooked Frenchmen banking. Well, France was taking in billions like most of the cartel from Saddam in those bribes he was handing out. Bill Clinton got around 50 million.
If one bothers to scratch the Franc, one soon finds allot funny money floating about that just might not be there in the first place........but the money that was there really ended up in cartel accounts and the little guy banker and investors are left holding the bag just like in the dotcom crash.
So who do you think is paying for this 7 billion dollar missing money?
Well the passbook savings investor at your local bank which has not been gobbled up by sodomite loving Chase or Wells Fargo along with every working American..........as Bernanke is not fixing a thing in this.......he is printing more money instead which is devalued so he has to print more money to fill that gaping hole now growing and more money to fill up the debt he just created.
One can only expand the economy so much to absorb American lack of production but buying cheap Chinaman goods. We have reached CONSTRICTION POINT. When the hedge funds buckle and the precious metals tank (they will tank when profit taking is employed by the cartel or the government confiscates it like FDR did when things got rough when he constricted a depressed economy) along with commodities......then worthless money is to be replaced with a new combined Amero based upon Canadian raw resources, border buster slave labor and American technology.
Bernanke is doing what he can do. His stimulus package sucks and only benefits the select areas that yuppies will dump their 500 bucks back into.......yes Virginia it will be high gas prices.
This welfare has to stop as does the printing of money on piles of worthless money. 2 years ago apples were 58 cents and today they are 1.28 a pound. The prices are worse in fuels and American wages have shrunk in buying power by 2/3rds worldwide.
One fixes this by increasing production and held wealth or property increased in real value. I have been pushing the taking of money from global warming which is billions and infusing it into homeowner grants who will then build disaster shelters. This will increase real wealth, really stimulate the economy and in a 5 year short plan even increase the electric power grid in solar panels so a real national program of wealth creation can be implemented as I have detailed in other blogs here.
Americans are paying for economic criminality and are about to be ambushed by all of this fraud. Bernanke is not to blame. He has just entered an inferno like on 9 11 and is peeing against the wall.
*HIC IACET ARTORIVS REX QVONDAM REXQVE FVTVRVS
Media wrong, as usual, to
January 25, 2008 - 22:03 ET by EdhenryMedia wrong, as usual, to connect the rogue Franco banker to Fed move. $7 B is real money, but a small isolated exogenous non-recurring event. So not near enough $$ to cause US Fed reserve to make a major surprise cut. Congress is pissing $150 B in a worthless stimu nothing package and wont effect Fed. Bernake cut to adjust FF rate aginst falling short rates & signal liquidity.
Bottom line, assets are readjusting valuation. Assets with global capabilities will prosper. Assets isolated to US will be of less value. This liquidity crisis will be solved, but US standard of living for most will slowly decline as our assets are no longer monopolies or as valuable. Some will prosper extra-ordinarily.
Media incapable of recognition of cause and effect. In the words of Cramer, the media, including Cramer, know nothing.
I agree, E. The problem
January 26, 2008 - 01:06 ET by jdhawkI agree, E.
The problem is over the inability of the banking system to put a value on CDOs. Dramatically reducing the Fed Funds rate, attenuates the resetting of millions of sub prime loans. This, in turn, stanches the ebbing value of the underlying assets to which the loans are pledged. This gives the finanical institutions that hold the derivatives of these assets time to better place a value or even revalue them.
Bernake did not act precipitiously. If nothing else, the proof is that the market violitility has abated.
Now, let's see what Bernake does on 30 January. The "street" wants another 50 basis cut. Will Bernake deliver?
Jim Cramer
January 25, 2008 - 21:37 ET by decI started following Jim Cramer nine years ago. What I've learned is that when he panics and screams "sell! sell!" it's actually the time to "buy! buy!".
small technicality
January 25, 2008 - 21:43 ET by candanceThe guy in France went on the lam, not the lamb.
Carry on.
wait,
January 25, 2008 - 23:42 ET by scamoramaHe's French!
He may have taken the lamb with him on the lam.
S, stop hamming it up on
January 26, 2008 - 00:56 ET by jdhawkS, stop hamming it up on the "lamb's expense while he is on the lam . . . That's just lame.
This is serious business - the drive by media says it is so!
Have we beat the pork chops out of this yet?
Just call me mint jelly cause I'm on the Lamb
January 26, 2008 - 07:37 ET by TWOTIMETUNADemocrats are either Parasites or Parasite Enablers
On the lamb?
January 26, 2008 - 01:31 ET by m4ster chiefHow many French traders can fit on a lamb?
Sunrise at sea; a breeze across the deck, salty spray tickles the face, the aroma of fresh coffee, stack gas, and haze-gray paint is in the air. Another Navy day aboard ship as a Navy Chief...the perfect life!
Regardless of how one feels about the Fed...
January 26, 2008 - 01:50 ET by sarcasmoThis one's 4X bigger than Nick Leeson. Now THAT'S a rogue-trader! How come this stuff keeps happening, if bankers are so professional and so well-regulated?? Oh, I know. More tax money needs to be spent on more regulation, because that's always the answer.
JMR
Rally online with fans of Dr. Ron Paul. (All purpose anti-slander-link, sadly-needed these days...)
And to continue my critique of central control & regulation...
January 26, 2008 - 07:31 ET by sarcasmoThese rogue trader cases remind me of how much better-run fiscally the World Series of Poker is than the average regulated bank or brokerage. It's VERY, VERY, VERY hard to steal someone else's chips & then lose them for him, despite thousands of players who might not all be that-honest.
In the big time trading world, a Nick Leeson happens. Then regulators -- whose jobs ostensibly were to stop Nick Leeson from happening -- say "give us even more tax money, and we'll learn from this and do better in the future." Then the next "rogue trader" scandal happens a few years later. Lather, rinse, repeat. But ask yourselves this: Why is a dumb card game consistently better-regulated than entire financial markets which claim to be well-regulated by central bankers???
JMR
Rally online with fans of Dr. Ron Paul. (All purpose anti-slander-link, sadly-needed these days...)
-
January 26, 2008 - 21:23 ET by dahliatraversDid Leeson funnel any of the proceeds from his "activity" to himself, Sarc? The latest is that Kerviel did not personally profit from the $7b he lost for SocGen in bad trades. Very strange.
Another SocGen tidbit
January 26, 2008 - 12:13 ET by celatorJust for fun, here's another SocGen tidbit.
SocGen is the French bank George Soros bought shares in as he participated in a takeover of the bank in 1988-89. As a result of his shenanigans, Soros was charged and convicted with insider trading and fined $2 million by the French courts. The charge and conviction were upheld by the top court in France in 2006.
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