Wondering about the topsy turvy markets this week? There has been a lot of theory and speculation, from George Soros shorting futures in India to the mortgage market problem, but I think Bloomberg is on to something here.
On Sunday afternoon, Bouton called Noyer and stock market regulators to tell them the scope of what they were uncovering. The regulators agreed Societe Generale should liquidate the positions as quickly as possible and then inform the market, Bouton said.
By the time European markets opened Monday morning, Asian stock indexes were down several percentage points.
“We had the bad luck that markets fell in Asia, but we had the good luck that volumes were so high so that we were able to make the trades without alerting the market,” Bouton said.
“There was never any question of holding onto the positions hoping markets would go our way,” he said. “And if we’d told the world about our positions, we’d have had the whole market against us and we’d have had losses 10 times as large.”
Since this guy didn’t make a profit off his efforts (that investigators can see so far,) it makes you speculate. Economic terrorism? Proxy for another financier? Did SG get lucky and pounce before he swooped for the kill? You also have to ask what positions he was taking on which companies. All will become public at some point.