If the writer is such an idiot, then a short post showing a few of the deficiencies in the article will no doubt be sufficient to expose him.
Unfortunately, one-line rants that use ad-hominem attacks don't qualify.
I agree. The writer, while having leftist tendencies of style, did an excellent job of reporting what happened. As others have pointed out, no one seems to be willing to expose the “who”, and the reason is right in front for all to see.
Follow the money. Who benefited financially and who benefited politically?
You might note that this poster has consistently pooh poohed the notion that massive fraud beyond imagination has occured, and nobody is rooting out the rats.
Make you want to say "hmmmmmmmmm."
I agree with you; ignore the facts and attack the messenger. Where have we seen this criminal technique before? And almost daily, as if to rub it in.
It appears Taibbi, a charlatan without brains and an honest bone in his body, has acquired quite a following on FR. It’s nice to see the unity of the leftist scum and the supposedly conservative forum... MNJohnnie, thank you for your voice of sanity. Beware, however, you’ll be attacked...
The stress on both banks was visible in the credit default swaps market well before their final collapse. Big put plays were made in both many times, not just on the occasions they paid. Those making such bets were basing them on intersecurity arbitrage, not mythical counterfeiting.
Every company has many securities that trade based on its value. Every position in the capital structure is represented, along with derivatives on each of them. The stock isn't going to be worth a bundle if the bonds go to zero. If the bonds are going to hold and pay off at par, then the CDS swaps that are basically puts on those bonds should have minimal value only.
Well, when the CDS contracts on these banks' bonds got to 5% a year and up front premiums to boot, it was to say the least quite probable the stock would be worth a lot less than the equity market thought. CDSs pay only if the bonds don't pay off at par. The bonds only fail to pay off at par if the company goes bankrupt and in addition there isn't enough left in the till to pay creditors - which by definition means there is nothing for common shareholders.
A situation in which the stock is trading at $68 a share but the CDSs are going begging at 5% a year plus up front premium, offered but not taken up, is not an arbitrage equilibrium. Either the CDSs are going to recover or the stock is going to zero.
A trader doesn't need to know which. All he needs to do is see the disconnect and take both sides. He buys a giant put position and writes (issues) the CDSs. If the company survives and the storm passes, he earns enough on the CDSs to cover the cost of the far out of the money puts. If the storm increases and the company fails, such that he has to pay out on the CDS contracts he wrote, he will collect so much on the puts he can cover even if the bonds go to zero, which they won't.
All that was required for this to occur was for the credit markets to be ahead of the stock market in sniffing out the danger. As soon as the pricing relationship appears, anyone active in both can see it and arb it.
It is not like Lehman would have been worth a hundred billion if not for those dastardly stock counterfeiters. That's crap.
The treasury and Fed should still have done something to keep the fall of the bank from spreading, for the creditors not the stockholders, in the case of Lehman. They did for Bear and it worked. They didn't for Lehman and the result was AIG going down and the authorities needing to issue $2 trillion in market support emergency actions by the following Friday.
That is all.
As for the whole nonsense about blaming shorts, shorts further price discovery and that is a good thing. They are the messengers and not the casual agents. Deadbeats on mainstreet not paying their mortgages caused the crash, not imaginary conspiracies of counterfeiting Gnomes of Zurich.