Cardboard Spaceship

Porsche Rips Its Best Clients a New One.

Now, this is at very least ironic.  Porsche built up its stake in VW in a perfectly legal if not very transparent way, and all of the hedge fund managers decided to short the stock.  Only, when Porsche announced it held not 42% odd of VW, but 75%, giving it a controlling stake, and it did it in German, all Hell cut loose.

Suddenly, the hedge funds, who had sold short stock equivalent to 13% of the shares outstanding realised that between Porsche's stake, and the Saxony Lande holding of 20%, there was only 5.8% or so available, at any price, in the market.  So 8% of those holding the shares had no conceivable way of covering their positions, leading to desperate bidding for the few shares that were available.   Share price up 400% in a few days, and becoming the world's biggest company by market capitalisation just underline the utter cluster-fuck that the hedge funds got. 

So, basically Porsche ripped the hedge fund guys a new one, essentially shafting some of their potential buyers.  Will we see a Porsche boycott in Hedgeistan? 

Also, if Porsche did sell some of it's shares out of kindness, it must have made a lot of money, almost enough to render the acquisition costs significantly less. 

Sometimes it is worth remembering the old gambling adage. 

"If you cannot see the sucker at the table, you are it."

Or another favourite City one.

"He who sells that which isn't his'un, must pay the price or go to prison..."

Astounding Number from Volvo

As reported in the Times of London and the Telegraph, one of the most amazing statistics about the recession I have heard yet.  In 2007 for Q3 Volvo heavy trucks got about 42,000 orders.  In 2008 Q3, they got 115.  That is not a typo.  Orders fell by 99.7 percent. 

Blog List Fixed

Just noticed that my blog list had been truncated, and that you could not see all the entries because of this, so if you thought I had cut you out of the massive love-fest that is the Spaceship, not so.  Bloody computers.

"Worst Crisis in Financial History."

Bank of England Deputy Governor Charles Bean says:

"This is a once in a lifetime crisis, and possibly the largest financial crisis of its kind in human history.  In terms of impact on the real economy we are still in early days."

Said to the Scarborough Evening News of all papers to talk to in such a fashion, but soon winging it's way round the world. 

Quick look at his CV makes it clear that he would have a good background to know about this, it's economics and maths at the good centres for just under thirty years, not some panicking nutcase.  (Like me.)

Ice Cuba Fights Back...

Royally* miffed at having been called terrorists, by Britain's use of anti-terror legislation to nick off with Icelandic assests to cover the droves of British savers who have been trapped in the collapse of the Icelandic banking system, Icelanders have put up a site making their view clear. 

Go see the fear inspiring Icelanders here. 

You might also sign it if you feel that a State having arbitrary right of confiscation of private property is a bad idea. 

*Republicanly miffed doesn't sound as good, even though it is true for Iceland. 

Apollo 13 Quote Feels Right...

In the film Apollo13, one of the two films in the last decade that has reduced me to a blubbing girlie-man (the other being Babe,) there is a great line when the head of the mission control team, Gene Kranz is trying to get to grips with the situation, and everyone is flailing about in confusion, and he says.

"Let's look at this thing from a... um, from a standpoint of status. What have we got on the spacecraft that's good?"

Financial world kinda feels like that at the moment.  Let's hope that the reentry works for us like it did for them.

Not all Cats are Gray...

Useful inventions of our time, a cat that glows in the dark.  Very useful for that, "where is the bloody cat, I saw it before the light bulb blew" moments that haunt us all. 

Mr Schroedinger might even be able to monitor whether the cat is alive or dead with a photometer in the box, thus relieving generations of hack science writers of a deeply favoured metaphor.

The Dog that Didn't Bark...

Lehman CDS seems to have passed uneventfully, making the Chicken Littles, (me included) sigh with relief.  Systemic collapse averted for another time, or hopefully never.  Is never good for you? 

Roubini Feeling Very Positive this Morning

Nouriel Roubini, AKA "Dr Doom" has a positive world view this morning.  Here he says, "hundreds of hedge funds will collapse", and as if that wasn't enough, a la Berlusconi, he declares that "markets may have to be closed for a week or more to quell panic" 

Now, if he was some random nutter, then you would ignore this blithely enough, but, alas for you and I, he has been rather on the money on this whole affair. 

Okey Dokey.  This isn't canned food and shotguns, this is decanter and revolver talk.  (For those not schooled in the stiff upper lip traditions of the English "upper class", if there was a disgrace or mishap that would lead to that greatest of catastrophe, embarassement and loss of face, the offender was asked to go into a quiet room, and given a decanter of whisky, and a revolver.  They were not expected to come out on their own two feet.)

Another Toxic Trillion of CDOs

A trillion here, a trillion there, and soon you're talking real money. 

It's not much wonder that my friends are divided into two groups, the bankers and the doctors.  Half of the Spaceship's real-life friends tend to be financial types, (and Anglo-phone) and the other half a French speaking doctors, not very remarkable given that we live in Geneva and Mrs Spaceship is a recovering Psychiatrist. 

If you are familiar with banks and banking, you just might get your head around this article about where the next trillion is going down the toilet, the corporate CDO market.  If not, then why would you worry? 

I was explaining what was going on to a medical friend of ours, the exception that proves the rule by being both medical and Scottish, but that's a story for another time.  I explained what CDOs, and CDS were, and how this is a nightmare for the financial world.  It might as well have been him explaining some odd cascade in the human endocrine system that would lead to my eyeballs spouting blood.  He didn't understand it very clearly, despite being fearsomely clever, but he could see that I did, and I was worried.

How to explain that the taxpayer got it in the shorts for trillions, but the banks have already lost it.  It is just taking time to work it out.     

Right, time to go and lie in the cellar.