Commander Spork (![[info]](http://l-stat.livejournal.com/img/userinfo.gif){kind=small} grandhoser) wrote,@ 2008-01-24 12:47:00 |
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No basis in reality
Today, the French bank Société Générale said a trader lost 4.9 billion euros ($7.1 billion).
What was the trader doing? "Plain vanilla" hedging on European index futures.
Okay. You have a stock. You have an index of stocks. You have the futures to the index of stocks (that's not today's value, that's tomorrow's value). Then you hedge your index futures. There is nothing plain vanilla about it.
You realize why you can lose $7.1 BILLION dollars, right? Because this is so detached from reality that Brian Eno thinks its pretty odd.
Then it's front page V-E day size headlines when a market wipes out a trillion dollars in value in the morning before swinging back to stability by lunch. Why? That value has so little effect on our lives. Has it raised the cost of milk? No? Then what's the real impact?
But, the numbers are so HUGE that politicians are forced to act to protect our delicate sensibilities. They talk and shout and flail and send us checks for $300. Not checks, advances on our tax returns. So we're fighting the wildly erratic swings of an over-leveraged market by getting an advance on the money that's returned to us when we overpay our bi-weekly tax contributions.
Forget about the flat tax. Let's just add a check box to the tax returns:
That way, we wouldn't have to "bail out" S&Ls or Enron, we wouldn't have to pay back BGE with interest, we wouldn't have to hear lipservice about saving the Social Security ponzi scheme, and we wouldn't have to suffer through weeks of stage managing this stupid economic stimulus debate.
Needless to say, I am so investing my tax rebate in a mutual double-hedge butter-pecan ultra-derivative REIT quantum index focused on speculative embryonic nanobot development of manmade islands in the 12th dimensional People's Republic of Uranus.
Today, the French bank Société Générale said a trader lost 4.9 billion euros ($7.1 billion).
What was the trader doing? "Plain vanilla" hedging on European index futures.
Okay. You have a stock. You have an index of stocks. You have the futures to the index of stocks (that's not today's value, that's tomorrow's value). Then you hedge your index futures. There is nothing plain vanilla about it.
You realize why you can lose $7.1 BILLION dollars, right? Because this is so detached from reality that Brian Eno thinks its pretty odd.
Then it's front page V-E day size headlines when a market wipes out a trillion dollars in value in the morning before swinging back to stability by lunch. Why? That value has so little effect on our lives. Has it raised the cost of milk? No? Then what's the real impact?
But, the numbers are so HUGE that politicians are forced to act to protect our delicate sensibilities. They talk and shout and flail and send us checks for $300. Not checks, advances on our tax returns. So we're fighting the wildly erratic swings of an over-leveraged market by getting an advance on the money that's returned to us when we overpay our bi-weekly tax contributions.
Forget about the flat tax. Let's just add a check box to the tax returns:
__ Check here to be left out of our harebrained schemes.
That way, we wouldn't have to "bail out" S&Ls or Enron, we wouldn't have to pay back BGE with interest, we wouldn't have to hear lipservice about saving the Social Security ponzi scheme, and we wouldn't have to suffer through weeks of stage managing this stupid economic stimulus debate.
Needless to say, I am so investing my tax rebate in a mutual double-hedge butter-pecan ultra-derivative REIT quantum index focused on speculative embryonic nanobot development of manmade islands in the 12th dimensional People's Republic of Uranus.
