Market Watch: Volkswagen Oops!

Little has been written about the role of the financial press in the market mess and of analysts quoted in the media. Here's an interesting item from the cover of the last weekend's issue of Barron's, the financial weekly. As part of a market roundup headlined, "More Pain," the story called Volkswagen "perhaps the most overvalued big company on the planet" and cited analysts who said the European automaker's shares "could fall under 100 euros... Its market value of $84 billion is triple Daimler's, a seemingly nutty situation."

Fast forward to Wednesday, when Barron's sister publication, The Wall Street Journal, reported VW's stunning 348-percent rally over the previous two days. "Hedge funds around the world absorbed a punishing blow Tuesday, as soaring shares in Germany's Volkswagen AG created one of the biggest losses from a single bet in recent memory," the article said.

"The funds are expected to face billions of dollars in losses, according to prime brokers familiar with the positions, because they were wagering that VW shares would fall. Instead, shares of the big German auto maker soared 82% Tuesday to €945 ($1,185)...

"VW shares are up 348% over the past two days and 267% in the past month."

Oops.

TAGS: markets

Journalists Attacked: Nicaragua's Ortega Targets Investigative Journalist

Daniel Ortega's government in Nicaragua is targeting the country's investigative journalism centre and its head, a former Sandinista himself, says this Christian Science Monitor story. Human-rights activists are up in arms over a government raid on the centre's office, in which computers and records were seized.

TAGS: journalists attacked

Interesting: Crash of '08 More Like '73 Than '29

Don't compare the Crash of '08 to 1929. Think the Panic of 1873 instead. Charlie Smith, editor of Vancouver weekly The Georgia Straight, where I frequently write, just ran an interesting post about must-read backgrounder stories on the Crash of '08. One, titled The Real Great Depression, is from historian Scott Reynolds Nelson on how today's mess is closer to the financial tsunami of 1873 than '29. That's the one your grandparents' grandparents used to talk about. It ushered in new words like "bum" and "tramp" and led to massive social and political transformations that set the ground for socialism, fascism, the welfare state and the wars of the 20th century. Wonder what fun stuff is in store for us.

Meanwhile, ProPublica has a good post on how conflict-of-interest at debt-rating agencies stoked the current crisis. Here are two S&P employees chatting on IM last year:

S&P Employee #1: btw-that deal is ridiculous

S&P Employee #2: I know right.. model def does not capture half of the risk

S&P Employee #1: we should not be rating it

S&P Employee #2: we rate every deal

S&P Employee #2: it could be structured by cows and we would rate it

S&P Employee #1: but there’s a lot of risk associated with it – I personally don’t feel comfy signing off as a committee member.

TAGS: markets, interesting