How One Man Lost $20 Billion In Two Days (bloomberg.com) 123
This week Bloomberg profiled "one of the most spectacular failures in modern financial history: No individual has lost so much money so quickly."
Meet Bill Hwang, founder of Archegos Capital Management: Starting in 2013, he parlayed more than $200 million left over from his shuttered hedge fund into a mind-boggling fortune by betting on stocks. Had he folded his hand in early March and cashed in, Hwang, 57, would have stood out among the world's billionaires... At its peak, Hwang's wealth briefly eclipsed $30 billion...
Hwang used swaps, a type of derivative that gives an investor exposure to the gains or losses in an underlying asset without owning it directly. This concealed both his identity and the size of his positions. Even the firms that financed his investments couldn't see the big picture. That's why on Friday, March 26, when investors around the world learned that a company called Archegos had defaulted on loans used to build a staggering $100 billion portfolio, the first question was, "Who on earth is Bill Hwang?"
Because he was using borrowed money and levering up his bets fivefold, Hwang's collapse left a trail of destruction. Banks dumped his holdings, savaging stock prices. Credit Suisse Group AG, one of Hwang's lenders, lost $4.7 billion; several top executives, including the head of investment banking, have been forced out. Nomura Holdings Inc. faces a loss of about $2 billion... On March 25, when Hwang's financiers were finally able to compare notes, it became clear that his trading strategy was strikingly simple. Archegos appears to have plowed most of the money it borrowed into a handful of stocks — ViacomCBS, GSX Techedu, and Shopify among them. This was no arbitrage on collateralized bundles of obscure financial contracts. Hwang invested the Tiger way, using deep fundamental analysis to find promising stocks, and he built a highly concentrated portfolio. The denizens of Reddit's WallStreetBets day trading on Robinhood can do almost the same thing, riding such popular themes as cord cutting, virtual education, and online shopping. Only no brokerage will extend them anywhere near the amount of leverage billionaires get...
People familiar with Archegos say the firm steadily ramped up its leverage. Initially that meant about "2x," or $1 million borrowed for every $1 million of capital. By late March the leverage was 5x or more. Raising money to invest in streaming made sense. Or so it seemed in the ViacomCBS C-suite. Instead, the stock tanked 9% on Tuesday and 23% on Wednesday. Hwang's bets suddenly went haywire, jeopardizing his swap agreements...
Hwang, say people with swaps experience, likely had borrowed roughly $85 million for every $20 million, investing $100 and setting aside $5 to post margin as needed. But the massive portfolio had cratered so quickly that its losses blew through that small buffer as well as his capital.
"The best thing anyone can say about the Archegos collapse is that it didn't spark a market meltdown," the article concludes. "The worst thing is that it was an entirely preventable disaster made possible by Hwang's lenders..."
"Regulators are to blame, too. As Congress was told at hearings following the GameStop Corp. debacle in January, there's not enough transparency in the stock market."
Meet Bill Hwang, founder of Archegos Capital Management: Starting in 2013, he parlayed more than $200 million left over from his shuttered hedge fund into a mind-boggling fortune by betting on stocks. Had he folded his hand in early March and cashed in, Hwang, 57, would have stood out among the world's billionaires... At its peak, Hwang's wealth briefly eclipsed $30 billion...
Hwang used swaps, a type of derivative that gives an investor exposure to the gains or losses in an underlying asset without owning it directly. This concealed both his identity and the size of his positions. Even the firms that financed his investments couldn't see the big picture. That's why on Friday, March 26, when investors around the world learned that a company called Archegos had defaulted on loans used to build a staggering $100 billion portfolio, the first question was, "Who on earth is Bill Hwang?"
Because he was using borrowed money and levering up his bets fivefold, Hwang's collapse left a trail of destruction. Banks dumped his holdings, savaging stock prices. Credit Suisse Group AG, one of Hwang's lenders, lost $4.7 billion; several top executives, including the head of investment banking, have been forced out. Nomura Holdings Inc. faces a loss of about $2 billion... On March 25, when Hwang's financiers were finally able to compare notes, it became clear that his trading strategy was strikingly simple. Archegos appears to have plowed most of the money it borrowed into a handful of stocks — ViacomCBS, GSX Techedu, and Shopify among them. This was no arbitrage on collateralized bundles of obscure financial contracts. Hwang invested the Tiger way, using deep fundamental analysis to find promising stocks, and he built a highly concentrated portfolio. The denizens of Reddit's WallStreetBets day trading on Robinhood can do almost the same thing, riding such popular themes as cord cutting, virtual education, and online shopping. Only no brokerage will extend them anywhere near the amount of leverage billionaires get...
People familiar with Archegos say the firm steadily ramped up its leverage. Initially that meant about "2x," or $1 million borrowed for every $1 million of capital. By late March the leverage was 5x or more. Raising money to invest in streaming made sense. Or so it seemed in the ViacomCBS C-suite. Instead, the stock tanked 9% on Tuesday and 23% on Wednesday. Hwang's bets suddenly went haywire, jeopardizing his swap agreements...
Hwang, say people with swaps experience, likely had borrowed roughly $85 million for every $20 million, investing $100 and setting aside $5 to post margin as needed. But the massive portfolio had cratered so quickly that its losses blew through that small buffer as well as his capital.
"The best thing anyone can say about the Archegos collapse is that it didn't spark a market meltdown," the article concludes. "The worst thing is that it was an entirely preventable disaster made possible by Hwang's lenders..."
"Regulators are to blame, too. As Congress was told at hearings following the GameStop Corp. debacle in January, there's not enough transparency in the stock market."
one burning question (Score:5, Funny)
linux.
did the dude use linux
Re: one burning question (Score:2, Interesting)
Re: one burning question (Score:4, Insightful)
You’re ignoring the drastic amount of collateral damage these sorts of shenanigans can and do cause.
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He's an ideologue. You're wasting your time.
The real world involves complexities and compromises.
My favorite general solution approach in this category would basically penalize bigness, thus guiding companies to become smaller. I dare even hope smaller companies would make it easier to have smaller government, but I might be an ideologue, too. (That could explain the lack of dialogue (though I thought it was mostly just my honest rudeness).)
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They (banks) will learn and lend wiser next time.
Hahahahaha, Funny guy.
Those that fail to learn from history are doomed to repeat it.
Those who fail to learn from the past will try to repeal it.
Re: one burning question (Score:5, Insightful)
hey (banks) will learn and lend wiser next time.
Hahahahaha, Funny guy. Those that fail to learn from history are doomed to repeat it.
Those who fail to learn from the past will try to repeal it.
And the banks will repeat it, over and over and over, because there's no regulations saying they can't, and if anything goes wrong the government that's failed to regulate them will bail them out. Got a bad gambling habit? Come and play in our casino, the taxpayer will reimburse us if there's a problem.
Re: one burning question (Score:2)
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Says the fool who has no idea of the impact of a loss of twenty billion dollars on the wider community. Investing is meant to be investing, a well regulated market, TO FUCKING PREVENT GAMBLING and all the shenanigans that go with it. Including attacking companies through their computer networks to crash the value of the corporations and raise the value of competitors or hacking corporations networks to do insider trading with inside information, both methods can earn billions and all come out of the gamblin
Re: one burning question (Score:4, Informative)
Investing is meant to be investing, a well regulated market, TO FUCKING PREVENT GAMBLING
But the problem in this case wasn't gambling. It was leveraged swaps.
Investors who gamble can only lose their own money. Leveraging gambling uses money borrowed from people who don't know what the gambler is doing with it.
(Unlike a managed fund, where the fund managers are required to be transparent about the investments they're making on their investors behalf.)
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who don't know what the gambler is doing with it.
So the answer is don't give people large loans without seeing the business plan or source of other income to service the debt. Don't give insufficiently collateralized loans under any circumstances.
The reality is a lot of these lenders are exactly as guilty of making highly speculative bets as Hwang. Play stupid games, win stupid prizes.
Re: one burning question (Score:2)
You do realize exchanges already charge transaction fees?
Re: one burning question (Score:5, Insightful)
"Privatize the profits, socialize the losses."
There's a minor "debate" in the central banking community, called "cleaning versus leaning" [theguardian.com]. Cleaning means letting financial companies do whatever they want and then if the system blows up, just do a bailout (with public funds of course). Leaning means trying to identify breakdown risks and putting in regulation to head those off. The problem with leaning is that regulators might suppress The Next Big Thing.
According to Bernanke and Gertler, central bankers should limit themselves to “cleaning up” after busts, rather than worry whether they can “lean” against booms [ft.com]. Even if you didn’t buy the theoretical logic, there was obvious political appeal to this approach, since it saved central bankers from having to take the heat for deliberately reducing the value of retirement savings.
There's no real debate however, cleaning is the chosen path since after the Savings and Loans crisis of the late 80s.
Re: one burning question (Score:4, Insightful)
The problem with leaning is that regulators might suppress The Next Big Thing.
Um, good?
I'm pretty sure I don't want there to be a Next Big Thing in finance. We do not need new ways of allowing people to make money by doing nothing at all. There are plenty of ways for them to do that already.
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...Cleaning means letting financial companies do whatever they want and then if the system blows up, just do a bailout (with public funds of course). Leaning means trying to identify breakdown risks and putting in regulation to head those off. The problem with leaning is that regulators might suppress The Next Big Thing.
The Next Big Thing? Oh, you mean like a Recession or a Depression?
Just imagine if CDOs were that "Next Big Thing" that was actually regulated back in the early 2000s instead of leading up to and ultimately creating an international financial crisis in 2008.
There's no real debate however, cleaning is the chosen path since after the Savings and Loans crisis of the late 80s.
Makes sense. Why would Greed N. Corruption give a shit when a briefcase full of Too Big To Fail kit can be shipped overnight via Amazon Prime to your favorite lawmaker. Socialized losses are the "best".
Re: one burning question (Score:4, Insightful)
And it should be no surprise that if you make your gamble big enough, you can only win. If you win, you keep the gains. If you lose, you get bailed out. It actually encourages recklessness, not innovation.
Re: one burning question (Score:5, Insightful)
Always blaming regulators. Regulation is not needed here. The lenders who got burned suffer in the market as a result of their ineptitude. They will learn and lend wiser next time.
Whose money do you think was lost by the bank? Do you think it was "the bank"? Or did it come out of the pockets of the executives?
I'm thinking it was the bank's stockholders. And that means people like you and me and our pension funds.
When it's a big enough screw-up, then the money comes from us taxpayers, not to mention the people who lose their jobs when financial markets have a hiccup.
The problem with no regulation is that the people who take the biggest risks (or shenanigans) outrun the rest of the pack and draw money away from sensible banks and businesses. For a while. Then when there is a hiccup, they fold completely taking down everyone around them including the good ones.
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Whose money do you think was lost by the bank? Do you think it was "the bank"?
Yes. Thats how it works. Did you think the bank lent out other peoples money without permission but those other people have the liability? You are fucking stupid.
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Whose money do you think was lost by the bank? Do you think it was "the bank"?
Yes. Thats how it works. Did you think the bank lent out other peoples money without permission but those other people have the liability? You are fucking stupid.
I didn't say that.
Liability is a legal term that does not apply here; the depostors are not liable for the banks losses. But they can indeed absorb losses up to the amount of their investment. Liable means they would have to make up losses in excess of their investment or account balance.
It's still ultimately the depositors and investors that take the losses, whether in stock price, lost dividends, or lowered interest rates.
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Those other people certainly do when the bank becomes insolvent especially if beyond FDIC insurance limits.
It literally is legally defined as "your risk" above that FDIC insurance limit, regardless of what the bank promises.
Also the bank can adjust fees and their willingness to lend and repossess based upon these factors so it definitely can effect you.
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Good. If you're going to invest in the stock market, you should take some responsibility. You shouldn't shirk that responsibility if you're just giving your money to someone else to invest for you.
That's the problem. The people making the decisions aren't accountable to anyone. If you were actually exposed to the risk you might look differently at that annual pension fund report. You might even question whether it's a good idea for your employer to be forcibly withholding a good chunk of your pay in the fir
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The problem with all of that is once again its moral hazard and it bails out the people who fundamentally are taking advantage of the system (Hint that is probably most of us) and punishes people who actually lived inside their direct means.
Consider the 2008 mess. If you had a insufficently diversified 401k that was all stocks and bonds for example not doing bailouts would have been a disaster for you. It would have created a massive deflationary event. That would also suck pretty hard for you if you had a
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Always blaming regulators. Regulation is not needed here. The lenders who got burned suffer in the market as a result of their ineptitude. They will learn and lend wiser next time.
Only if they are immortal. Real people, especially at the level where they can have an impact on this scale, have limited lifetimes in which to try to ride a wave and get out before it breaks. For most of them there will not be a "next time" because they will have retired. The next generation just sees that someone made a killing by taking a risk, or that someone made a mess and the taxpayer cleaned it up for them. There's no incentive for the industry to regulate itself; the hand is invisible because it's
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Always blaming regulators. Regulation is not needed here. The lenders who got burned suffer in the market as a result of their ineptitude. They will learn and lend wiser next time.
What in the whole history of the human experience makes you think people even remotely learn from past mistakes, let alone the mistakes made by others?
We have blown up nuclear reactors without investing in safety. We have melted down the market in various ways countless times. Millions upon millions of people lose their life savings to scams or poor choices, and yet people still keep making them.
There's no evidence anywhere throughout history that punishing a person makes others stop making poor decisions.
Re: one burning question (Score:2)
Also has a history as an insider trader (Score:4, Informative)
In 2012: "Bill Hwang of hedge fund Tiger Asia Management admits illegally trading millions of shares in US$60m settlement"
https://www.scmp.com/business/... [scmp.com]
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Imagine a profitable stock trader in an era where the market's lovey-dovey relationship with regulatory oversight was neutered... hell, they might have to invest in and encourage the stocks of companies making useful things with innovative ideas.
But nah, let's continue to allow the decimation of legislation like Glass-Steagall [investopedia.com] so opportunists like this bloke can game the system and accumulate billions.
Capitalism, amiright?
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"Capitalism, amiright?"
You're complaining about the wrong boogie man. Removal of regulations has nothing to do with Capitalism.
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You clearly don't understand that that is simply a failure of our particular government. We shouldn't be allowing corporate lobbyists, because corporations are NOT "people too". The fact that we do isn't a ding against capitalism, only our particular implementation, and it could be corrected if only SCOTUS would change it's mind.
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By your logic there should be NO lobbyists (people receiving compensation to represent others to politicians) - not for the financial industry, unions, pro-life groups, the ACLU, the NAACP, the NRA, the WWF, the Sierra Club, the Democratic party, or any other organizations as none of these are "people".
This logic seems to mean that no contact with politicians should be allowed if the individual received resources from anyone in conjunction with that contact. This would include travel expenses such as buses,
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What part of "corporate lobbyists" did you miss? Work on your own logic.
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Why should a corporate lobbyist be treated any differently than an ACLU lobbyist?
Both represent groups of people. In the case of the corporation, they represent the shareholders' interests. In the case of the ACLU they represent the interests of those who chose to donate and join the ACLU. I see no distinction.
If I own a private business I certainly have an interest in regulations and incentives the government puts in place related to that business. I should be able to use the same tools as someone who has
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True, but unfortunately that's not what we have.
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I used to fantasize about that, but now I'm more realistic :(
The old rogue trader narrative (Score:5, Interesting)
I bet you at least some or all of the prime dealer banks knew exactly what he was doing (well, maybe not *exactly* - to protect them from legal exposure - but that he was taking a lot of risk). The opacity of his investment structure worked for them as well - it meant they could fund risky bets on bubbly asset markets without having to disclose this to regulators/markets.
This would seem like a useful way for them to get around the curbs on their activities placed on them to avoid another GFC. These guys are just so evil, and smart. It does make you wonder how many other Archegos are out there bidding up asset prices right now.
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These guys are just so evil ...
They were gambling with their own money. So how are they "evil"?
... and smart.
They lost billions. So how are they "smart"?
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I wouldn't use the term evil, but it is criminal. They were they gambling with borrowed money. It hurts shareholders of the bank, and if they lose enough money, it hurts employees of the bank. (Though I bet whomever approved these loans wont be held accountable.)
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I wouldn't use the term evil, but it is criminal. They were they gambling with borrowed money.
It is not a crime to gamble with borrowed money.
Every loan is a gamble to some extent, and most are made with money that banks have borrowed, either from their customers or from the Fed.
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I wouldn't use the term evil, but it is criminal. They were they gambling with borrowed money.
It is not a crime to gamble with borrowed money.
Technically, you are right. But it *SHOULD* be a crime to gamble with borrowed money for one simple reason:
When you gamble and lose all the money you borrowed, the person who loaned you the money gets fucked if you can't pay them back.
Every loan made carries with it a number of risks, including credit risk. Evaluating the risks and pricing them into the price of the loan is part of the lenders job.
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That's what happened in 2008-2009 and we still haven't learned from it. Banks deliberately made loans that were extremely risky and almost certain to default. They didn't care because they took out insurance (Credit Default Swaps).
People lied on their loan applications to get loans because they saw it as a way to get rich quick as housing prices only went up. They were surprised when someone called them on this
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It can't be that banks were helping these people get loans they couldn't afford. Why, that never happens. Next you'll be telling me Wells Fargo employees were faking accounts to make the numbers look good!
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Ditto with collateral. Banks can insist on things like holding the actual titles, stock certificates ( paper or electronic ) for collateral. They don't have to take your word for it about assets. They might feel they have to reduce fricition and be competitive but they are than speculating on the client's trust worthiness and while
I think they should be 'free' to do that I also think that means they had better be prepared to eat any loses they can't recover directly from the fraudsters via the legal system
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Every house loan and car loan offered by anyone (usually a bank or other financial institution) is a gamble. These are gambles on at least two dimensions. One, that the borrower will be able to, and will choose to, pay the money back. Second, both being collateralized loans, that the collateral will not decline in value sufficiently, due to market forces or due to damage or lack of maintenance, to not cover the outstanding balance and the expenses of foreclosure or repossession.
Remember, that the person who
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True, but I thought he lied to the banks to get extra loans on the same collateral. Or maybe the banks knew about it and gave out risky loans on purpose. Its like nobody learned from 2008.
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"Shareholders of banks" are those people who decide to invest in a sector that is associated with risk taking. If they didn't want to accept that risk, they shouldn't have invested in the financial sector (or at least not the risky portions).
The employees of the banks are not owners and have no say in these things except to the extent that the shareholders, through the shareholder elected board, chose to grant them that power directly or indirectly.
When you hire a mechanic to fix your car or a doctor to tre
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They were gambling with their own money. So how are they "evil"?
They weren't gambling - Hwang was secretly manipulating the stocks. Him and his backers may have found a legal way to do this, but it is still a fundamentally immoral thing to do.
They lost billions. So how are they "smart"?
Look closer. Not all the primary dealers lost out.
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They were gambling with their own money. So how are they "evil"?
No they weren't. They were gambling with other people's money. Every time a large corporation, especially a bank loses a shitton of money there's a very high liklihood that the end result will trickle down to the people using that bank. Heck if you're "evil" enough, it may even trickle down to the tax payor.
They lost billions. So how are they "smart"?
They are "smart" because they get away with it, without punishment.
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If the end result trickles down to the people using the bank, either the customer decided not to make sure that their money in the bank was FDIC insured or they decided to take that risk of losing the money. I've had times when I had balances above FDIC insurance levels at banks (usually for fairly short periods of time) and I'm acutely aware of that and am very aware I'm taking a chance in exchange for convenience.
Although, the "trickling down to the taxpayer" is a problem. Notice that didn't happen here t
They're not all that smart (Score:5, Informative)
These guys aren't smart, they're well connected. They buy off congressmen to make sure the laws to stop them from gambling with our lives don't get passed, and every now and then when they *really* fuck us over that those laws get repealed. e.g. all the post 2008 laws meant to stop this crap got repealed once Trump was in office and he had his party in charge of Congress. , literally within weeks of it. Alarm bells were raised by folks like me but, well, nobody listens.
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I bet you at least some or all of the prime dealer banks knew exactly what he was doing (well, maybe not *exactly* - to protect them from legal exposure - but that he was taking a lot of risk).
Every bank who loaned him money:
(A) Knew exactly what he was doing and didn't care because they thought that they would profit from it
or
(B} Deliberately made sure that they didn't know what he was doing, aka Plausible Deniability
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This is a stupid take, why would they want "deniability" when they're the ones who would lose their money if it came crashing down? And most of them did lose money.
They got greedy, they loaned a known-unreliable person an excess of money, and they had to liquidate the insufficient collateral. Of course they knew what he was doing; his doing it relied on their participation.
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This is a stupid take, why would they want "deniability" when they're the ones who would lose their money if it came crashing down?
Because there is more than one 'they'. The organization as whole probably wants correct due diligence done, they want accurate analysis etc. Certainly their own investors and stock holders do. On the other hand Bob the corrupt loan officer with the perverse incentive of getting paid a bonus on the size of his business book has other ideas. He wants to write the contract collect his outsized bonus this quarter and eight months after when the entire thing goes tits up, to be able to feign ignorance of it all
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A lot of trading schemes appear to be to set up highly leveraged positions betting against something unlikely happening. Eventually due to statistics the unlikely thing actually happens and it all goes up in a puff of smoke, and often someone else is left to deal with the consequences.
Similar to putting everything on black after 10 roulette reds and it comes up red again...
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Actually, it's not "extremely unlikely" that a fair roulette wheel will come up red again after coming up red ten times in a row - it's a bit less than 50-50 (the actual odds depend on if there is just a 0 or also a 00 on the wheel) just as it would be after the wheel came up black ten times in a row.
Re:Also has a history as an insider trader (Score:5, Insightful)
As in B5, it was the last best hope for proving that financial fraudster can be rehabilitated, it failed. The financial industry has proven itself to be gullible and incompetent. To be more clear, this is an international banking incompetence, involving some of the most respected and prominent banks in the world.
not particularly large leverage (Score:3)
Re:not particularly large leverage (Score:5, Informative)
The volatility in stock/bond is an order of mag less volatile than options. So when he leverages 5 to 1, it is probably more like 50 to 1 on derivatives.
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As far as leverage goes 5-1 is not all that bad, during the busts in the 2000-2010 you had some banks hitting as high as 10-1 or even some cases of 20-1.
There's a big difference in what you're leveraging against. 5-1 is pretty fucking bad for a stock portfolio. The 10-1 or 20-1 leverage from the financial crisis was from far more "secure" investments, such as highly rated mortgages (remember the sub prime crisis was only invested in because the people providing the money didn't dig deep enough to see they weren't secure investments), and bonds which are generally considered quite a stable form of investment for the incredibly risk averse.
Leveraging yourself
Darn we need to update our dictionaries (Score:1)
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Another idiom that applies is "Picking up nickels in front of a steamroller."
Hwang's strategy almost always worked. He picked up pockets full of nickels every day.
Until, one day, he didn't get out of the way in time.
Pointing fingers (Score:2)
"The best thing anyone can say about the Archegos collapse is that it didn't spark a market meltdown," the article concludes. "The worst thing is that it was an entirely preventable disaster made possible by Hwang's lenders..."
"Regulators are to blame, too. As Congress was told at hearings following the GameStop Corp. debacle in January, there's not enough transparency in the stock market."
So... blame everyone but the guy who bit off more than he could chew?
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I mean, it's pretty much par for the course. The financial world keeps making the same mistakes over and over, bringing us all to the brink of destruction every time and the only people who ever have to pay the price are the 99% of the world that aren't ultra-wealthy.
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bringing us all to the brink of destruction
A $20B loss brings us nowhere near the brink of destruction. That is about 7 hours of America's GDP. And that money isn't gone. It was just redistributed to others.
the only people who ever have to pay the price are the 99% of the world that aren't ultra-wealthy.
Except, in this case, the people who lost money were billionaires.
The beneficiaries were people who invest conservatively for the long term, who were on the other side of Hwang's bets. So if you have an IRA or 401k invested in equities, you likely made money.
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Conservative investors don't make money by him losing money.
They buy a stock, and hold it for a long time, and then sell it.
People who made money were people doing risky options trading, who were shorting ViacomCBS, and potentially people like myself, who bought that stock, and CreditSuisse, when they went down, with the intention of selling them again when they go back up.
Viacom is a dubious long-term investment, they're the #4 streamer in a rapidly-consolidating market. As CS is down, again, because they
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"The best thing anyone can say about the Archegos collapse is that it didn't spark a market meltdown," the article concludes. "The worst thing is that it was an entirely preventable disaster made possible by Hwang's lenders..."
"Regulators are to blame, too. As Congress was told at hearings following the GameStop Corp. debacle in January, there's not enough transparency in the stock market."
So... blame everyone but the guy who bit off more than he could chew?
Yes, and it was entirely preventable by Hwang himself by not being greedy. Seriously, he had amassed $30B, how much is enough? Ya, some will say, it's never enough, but that's either hubris, stupidity, simple shortsightedness or thinking it's just a game. Turn $200M into $1B and fucking *retire* -- or, seriously, just with the $200M.
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> Seriously, he had amassed $30B, how much is enough?
$30.5 billion. He was was so close too.
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Star Trek (Score:1)
Wait wait... this guy saw the garbage CBS was pumping out like STD and "Murphy Brown: the Orange Man Bad Years" and then double/triple downed on his positions? He got what he deserved on his extremely poor tastes alone.
Hopefully he'll be studied closely so in the future scientists can determine what causes this type of mental illness.
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Wait wait... this guy saw the garbage CBS was pumping out like STD and "Murphy Brown: the Orange Man Bad Years" and then double/triple downed on his positions? He got what he deserved on his extremely poor tastes alone.
Television networks aren't run for the shows, they're run for the ads that make them their money. Of course good shows will help with that, but you're taste in shows is just one data point. They keep making shows like that because people keep watching them and companies keep buying ads for them. They may not be great, but they're good enough for their purpose.
Also ViacomCBS [wikipedia.org] owns a lot more than just CBS ...
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Hey Edgelord, your tastes =! the public at large. For fuck sakes they just are about to launch ANOTHER Law and Order. And ANOTHER CSI - which is actually set in Vegas again but somehow isn't the original? But I digress. You can not like something all you want, but if the public at large likes it, it's good for business. That's why dreck like the Kardashians and 4,292 cop procedurals and shit like 2 1/2 men get 12 seasons but something that appeals to others dies after half a season.
Re: Star Trek (Score:2)
Hey, that's offensive! We call it "American Culture" over here!
What I say is (Score:3)
Artificially rich dude thanks to the financial market becomes poor for real thanks to the financial market. Cry me a fucking river.
If anything, I feel like opening another beer to celebrate. It's a refreshing change for ordinary people with real jobs and truly earned income like us who have to suffer the consequences of traders playing big with our money every 10 to 15 years.
Re: What I say is (Score:1)
Re: (Score:1)
I'm pretty sure hes not poor, he lost the banks money, and would most certainly have kept a lot of his own in offshore accounts, trusts, property etc.
Re:What I say is (Score:5, Informative)
If you default on $10,000 its your problem. If you default on $10,000,000 its the banks problem.
Re:What I say is (Score:5, Insightful)
If you default on $10,000 its your problem. If you default on $10,000,000 its the banks problem.
And if the bank defaults on $1trillion it's the taxpayer's problem.
Re: (Score:3)
Re: (Score:2)
Don't bet on it. He probably still has enough left to retire richer than most of us will ever be.
That's how deeply the deck is stacked.
Re: (Score:2)
Artificially rich dude thanks to the financial market becomes poor for real thanks to the financial market
Why do you think he's poor now?
Very little of that headline loss was his money. Most of it was from banks that loaned to a corporation. That corporation will now be dissolved, and he'll go start another corporation to do the same thing again.
Each time, he'll siphon off some really nice profit when things are going well, and then abandon the corporation when things inevitably turn bad.
Lenders do a lot of due diligence when we peons get a mortgage. But that all flies out the window when someone wealthy is
not enough transparency in the stock market (Score:1)
Ya think?!
Everything is working the way people want. Where's the problem?
Play stupid games (Score:2)
Play stupid games, win stupid prizes.
You hate to see it... (Score:2)
...err, no you don't.
Re: (Score:3)
Yeah, I do. Because the banks involved have had a big chunk taken out of their capital. That stuff they have to have a certain reserve of in order to make loans. So when your company goes in to borrow to buy raw materials for its production line, the banks just say, "Sorry. No money left." That's what happened in 2008 and the capital reserve requirements have been tightened up since then.
We need Glass-Steagall back. If some idiots want to fling poo in their investment bank circle, go right ahead. Commercia
Re: (Score:2)
Hey, no argument there.
What disaster? (Score:2)
"The worst thing is that it was an entirely preventable disaster"
Talk about hyperbole. Who died?
hedge funds (Score:2)
Good (Score:2)
Credit Suisse Group AG, one of Hwang's lenders, lost $4.7 billion...
Good, are they going out of business?
Of course they're not, which is a shame.
Re: (Score:2)
Maybe they will choose wisely in the new promotions? Nah.
If it's all borrowed money. (Score:2)
Silly Exchange Commission might do something about transparency this time? Nah.
Consider this (Score:3)
if an average person engages in a fraudulent activity, years in prison await,
The answer to this modern problem in market economies is NOT Marxism, which always produces worse results - the answer is legal reforms that make the rich and powerful exactly as accountable as the poor and the middle class, accounting for net worth.
Simply assign a fixed minimum penalty for each offense (so nobody gets away with crimes on the basis of poverty), and then scale all criminal and civil penalties to the global net worth of the individual found guilty of any particular offense, and you will find that the rich and powerful get a whole lot less annoying and reckless, particularly with other people's money.
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This wasn't a case of fraud, this was a case of a failed investment resulting in a margin call that he couldn't cover. That's all there in the terms of the loan, for both parties.
The same thing happens to retail traders every day; they borrow too much on margin, their stocks decrease in value, their broker makes a margin call because of that, they can't cover it, so their stocks get liquidated, and they end up filing bankruptcy to escape the debt.
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and you will find that the rich and powerful get a whole lot less annoying and reckless
The death penalty exists for heinous crimes, and yet they still occur. Why do you think that is?
It's a fantasy to think increasing punishment actually reduces crime. This has been studied to death and found not to be the case. Locking people up won't change a thing. Humans are great at justifying why when they do something it'll be "different" to when that other guy did it and got caught. We are also fucking horrible at judging risk.
That said I support raising penalties just so I can experience a bit of sch
He didn't lose anything. (Score:2)
He didn't *gain* it.
I know the writer works for the Content Mafia, who practically invented confusing those two terms, but: There's a difference!
In this case you are mistaking a fantasy number in some database, that is set based on the current beliefs of some crazy gamblers, with actual certificates of work.
(Hint: Unless you find a moron who will exchange his actual certificates of work for your fantasy number, you ain't owning shit. Might aswell beFinal Fantasy "gil" or monopoly money.)
Huh? (Score:2)
So let me get this straight...a guy I have never heard of, who spent money that wasnâ(TM)t his, on stocks I have never heard of, which in the end caused no real effect on the market?
Is this a Tenet style, âoeNobody cares about the bomb that didnâ(TM)t go offâ sort of thing? :)
Iâ(TM)m sure I am missing something, but is this article meant as some kind of fable about trading on margin? Or did the people backing his leveraged positions not get their money back and now want vengeance?
no bailout for Credit Suisse (Score:2)
Arch egos (Score:2)
He did not lose anything (Score:2)
*sigh* (Score:2)
Too much is never enough for people like that... but lets give them control of the economy, make their game the "standard" and wonder why shit falls apart.
Re: (Score:3)
False. Stop reading blogs or social media, and thinking it is news.
The creditors began negotiations, because some of them wanted to do a deal. Others chose not to make a deal, and moved first to liquidate, and didn't lose as much.
This idea that there was a deal is a stupid fantasy, retold by people who think "hear shit, repeat it" is knowledge.
The known fact is that when JP Morgan and Goldman-Sachs were approached about a deal, they wanted everybody to put their cards on the table and declare what the holdi