Wednesday, January 21, 2009

Credit Suisse loses $880 million a week

$880 million a week lost by "trading" in October. If they lost that much each week, what were they doing, and what is their financial health?

Meanwhile, the FSA blames the shorts and not just panicked longs:

The Financial Services Authority is analysing Friday’s share price movements in Barclays when the bank lost a quarter of its stock market value in the last hour of trading.

The City regulator is thought to be asking market players to provide information about the frenzied trading that took place on Friday amid rumours the bank was about to be nationalised or face catastrophic losses in its investment bank.

Didn't FSA just decide to change the capital requirements under Basel II?

We have also been working with these banks to seek to ensure that the application of the current International Basel Accord, which is implemented through the Capital Requirements Directive, does not create any unnecessary or unintended pro-cyclical effects. In particular, we are amending the variable scalar method of converting internal credit risk models from point in time to through the cycle.

(and then, in the last sentence, in the link below, you have what the above means.)

These changes will significantly reduce the requirement for additional capital resulting from the procyclical effect.

A couple months ago Saudi Prince Alwaleed, said he was going to increase his stake in Citigroup from 4 to 5%.

He used the bump to "diversify" his holdings. Was it shorts or him? It's just a bad argument.

So now these stocks are just becoming call options on the next phase of the next TARP.

Yesterday, you had almost 44 million shares traded in the SKF. The stock closed at 200. And these players are the ones "blamed" for causing the bank shares to collapse, with their $8.8 billion of shares trading.

Sure that's a crowded trade now, but did the banks fall down because of the $8.8 billion worth of trades in SKF, or Credit Suisse losing $880 million a week?

That statement isn't supposed to make sense, because the argument doesn't!

But shorting banks at call option prices isn't a good entry point, even if the system is "insolvent."

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