Today we saw our government unveil their latest plan to deal with the "global credit crisis", i.e. further indebting future humanity, and as such shares in banking institutions plummeted, the Royal Bank of Scotland's by an astonishing 67%, thus leaving them at 33% of this morning's value.
What seems curious to me is that today, as in America's Martin Luther King Monday holiday, is the anniversary of the Jerome Kerviel scandal - when his employers, Societe General, offloaded vast amounts of stock, causing massive declines in worldwide stock markets.
From my post of last January, Give 'em enough rope:
It seems that Jerome's job involved dealing in colossal sums of "money" in order to exploit microscopic fluctuations of share values in the stock market. It is, to a certain extent, irrelevant. What is relevant is that his employers, Societe Generale, sold vast quantities of Jerome's stock "holding" on Monday 21st January, thus forcing stock prices down in the bargain. America was holidaying that day and therefore not trading: as such the French bank was offloading to a half empty marketplace.
Thus, when the aforementioned economic rules of supply and demand are applied, we can see that there was less demand on the Monday because America was shut. Additionally, S. Generale had an astonishing £37 billion worth of Jerome's stock to unload in order to redeem his position, which increased the "supply" to the financial markets and thus reduced the share price accordingly.
Then on the Wednesday, the "fraud" seemingly as yet still not common knowledge, the Federal Reserve cut U.S. interest rates by 0.75%, the largest reduction for 26 years, citing the slump in stock market values as rationale.
What seems curious to me is that today, as in America's Martin Luther King Monday holiday, is the anniversary of the Jerome Kerviel scandal - when his employers, Societe General, offloaded vast amounts of stock, causing massive declines in worldwide stock markets.
From my post of last January, Give 'em enough rope:
It seems that Jerome's job involved dealing in colossal sums of "money" in order to exploit microscopic fluctuations of share values in the stock market. It is, to a certain extent, irrelevant. What is relevant is that his employers, Societe Generale, sold vast quantities of Jerome's stock "holding" on Monday 21st January, thus forcing stock prices down in the bargain. America was holidaying that day and therefore not trading: as such the French bank was offloading to a half empty marketplace.
Thus, when the aforementioned economic rules of supply and demand are applied, we can see that there was less demand on the Monday because America was shut. Additionally, S. Generale had an astonishing £37 billion worth of Jerome's stock to unload in order to redeem his position, which increased the "supply" to the financial markets and thus reduced the share price accordingly.
Then on the Wednesday, the "fraud" seemingly as yet still not common knowledge, the Federal Reserve cut U.S. interest rates by 0.75%, the largest reduction for 26 years, citing the slump in stock market values as rationale.
Graph above is The Royal Bank's share price over the last year.
Just another coincidence ?
cheers
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