Sometimes, You Just Gotta Laugh

Seems Bernanke got egg on his face this week. Societe General reported the largest loss ever due to a "rogue trader", $7.2 Billion. It seems that the process of unwinding tens of billions of positions in stock index futures caused the global plunge on Monday and Tuesday. (see whole story at Bloomberg) Among other hilarious details is that Societe General took the opportunity to sneak in a $2 Billion loss on subprime mortgage derivatives as well. Here's a great quote, "The company said it's suing the trader, who had a salary and bonus of less than 100,000 euros a year and worked at the bank since 2000." Wow! How will they get anything back? Make him come back to work for free? It gets better. "His approach was to balance each real trade with a fictitious one, and his ``intimate and perverse'' knowledge of the bank's controls allowed him to avoid detection, co-Chief Executive Officer Philippe Citerne told reporters. " It also seems that the trades were "massively in the money" until the last couple of weeks. Never fails. When you are trading, you usually lose if you don't take profits that are "massively in the money." Why don't banks ever discover their rogue traders when they're making money? This story is the greatest hooey I've ever heard. And one final gem. "He ``breached five levels of controls,'' Christian Noyer, the governor of the Bank of France, said at a press conference today. He described the trader as ``a computer genius'' and said he was told he was ``on the run.''

"On the run," eh? Next we'll be hearing that they're making this into a movie. I can't wait.