Well, they reckon the position is now flat. http://www.ir.socgen.com/en/downloa...treinte/Societe-Generale_slides-240108_gb.pdf [page-3, under "Exceptional Loss" LOL!]
I recall thinking yesterday that some big hedge fund might go bust and require government intervention. The sub prime mortgage crisis story is months old and I do not expect it to motivate selling now. There might be another piece of nonpublic bad news and maybe this is it. Also possible is that there are more hedge funds in trouble. I can not know the nonpublic news, but I do not have to hear the news. The behavior of prices tells the story. Recent events remind me of September 1998 when Long Term Capital Management blew up.
According to this article: http://biz.yahoo.com/ap/080124/france_societe_generale_fraud.html its over $7 billion
I was just thinking - maybe my math is off - if they lost $5bln in futures and we assume this is European equity futures. Let's assume they liquidated being down 10%. Realizing a loss of ~$5bln means the value of the underlying was ~$50bln EUR. That's ~285,000 FDAX contracts (Or an equivalent mix of CAC, ESTX50, DAX etc.) :eek:
10.48 - bank had a âduty to cut off positions before disclosing the information.â âWith the chance of good fortune, it was possible to liquidate these positions over three days which was quite exceptional.â âThey could have turned into gains if the market had gone up.â âWe discovered this at the same time as the market plummetingâ¦.we really had to settle those positions as fast as we could and we did so during the three day crisis which you all witnessed.â