That hole over there… you don’t see it? It’s a 7 billion dollar hole in your balance sheet you fucker.

http://www.forbes.com/2008/01/24/societe-generale-trader-face-cx_ll_0124autofacescan01.html

The last time a French guy looked this mad, Hitler was driving past his house!

Unreal. Who the fuck watches these guys? I can’t understand it.

Ok, I do have a secret interest in what happened with the king of future bets gone entirely too wrong, Nick Leeson.

He wrote a book called ”Rogue Trader” which illustrates how he went from a small error done by one of his staffers to a 1.2 billion dollar hole. He also said that no one could see the huge hole in the Barings balance sheet, and no one seemed to question his actions which involved continually asking for funding which made the situation even worse.

So now, instead of ultra-exotic (and ball-smelly hot) Singapore, we have a Frenchman, born in France, making massive (maybe upwards of $50 Billion) in futures bets on European exchanges. All I gots to say is.. “wow.”

Seriously, was everyone asleep at the wheel? How can no one actually see that he had used up what could amount to $50 billion purchasing securities? I mean, banks take money from their customers in the form of overdraft fees and other associated bullshit, but I don’t even think Citigroup (or, what’s left of it after the Subprime crisis) has that much capital to invest (or, had it in 2006, to put it into prospective).

So this fella had some backoffice knowledge. That’s great… what you need is to train a killer to kill his trainers so no one can fight him off. While i’m sure SocGen had -some- idea about the knowledge that this person possessed could hurt them, their internal auditors didn’t notice what he was up to. Risk management at it’s finest.

Derivatives are fucking weird. They’re really nothing other than just a shake commitment and a hope that something occurs to make one come out ahead. Futures bets are akin to heading to Vegas and dropping $100 on theAtlanta Falcons for a 140:1 return. I actually don’t know how holders of these derivatives actually get paid, but I’m told there’s a clearing house for them.

Warren Buffett once said that they are “Weapons of mass financial destruction.”

Well, someone might wanna call the El Presidente Bush and notify him that we found a massive detonated WMD in an office block in Paris.  And my company ID photo doesn’t even look that bad.

~ by civicmon on January 25, 2008.