Funny Business

Odd Futures Activity Last Weekend

I remember thinking to myself last Monday night (a holiday in the US, markets closed) how strange it was that the US futures were down so much even after the prior Friday’s major selling. Usually how it works is that the US sells off and the rest of the world catches up the next day. So it was expected to see Japan, Asia, and Europe selling hard on Monday.

But how come the US futures tanked even further? It just didn’t add up. Nothing new came out during the weekend to justify a deluge of sell orders.

Well, it turns out that a lot of other people thought it was weird too. And when the Fed cut rates 75 basis points early that morning (while I watched), yet still only helping the market to open down like -400 on the Dow, you had to be even more suspicious.

This post lays out a connection between Société Générale’s unwinding of its rogue trader’s $6-7billion positions and the Fed’s cut. Did the Fed completely panic and cut rates more than it has, at one time, in the last few decades? Was it merely responding to stock speculation?

The implications are disgusting. Furthermore, what ever happened at Société Générale looks shady. It declares that the fallout was limited, that it orderly dismissed the guy and unwound the positions. But everyone else is looking at this and thinking, “Not only do I doubt this guy was alone, but I also doubt losing that much money at once was treated orderly.”

Now you know why the Fed is getting so much heat right now. Combine that with pushing this dumbass stimulus package and one would think economists weren’t running the show there anymore…

“Financial Apartheid”

I read this article about the transfer of wealth out of the poor, black community in Cleveland. One person calls it “financial apartheid”.

Do you know what I see? I see the same complaints that were levied against the Structural Adjustment Programs of the IMF during its brutal demolition of developing nations worldwide in the 80’s and 90’s under the bone-headed neo-liberal academic mindset. Now that other countries no longer trust the World Bank and IMF (seen as US-led institutions while the UN is not), they are pursuing their own paths to development and growth, seeing the US’s development packages as full of ideology and criminal loan practices.

But the same shit is now being dumped on Americans. The subprime mess has focused almost entirely on the banks’ abilities to lose billions upon billions of dollars. But it’s easy to forget that the other side of the situation is that people who had very poor credit and little hard assets have now lost not only their homes, but any path towards financial security. It’s a big sucking sound out of the poor community, which in Cleveland’s perspective, is predominantly black.