Wednesday, June 9, 2010

Vague Market Bankruptcy Rumors Swarm BP (BP)

BP is taking another big hit today as 'vague' bankruptcy rumors are hitting the blogosphere (twitter-sphere)?  Hiring certain lawyers or such stuff.

Keep in mind if your a hedgie who is short BP it is a very easy way to make money in today's casino - plant a rumor, get your hedgie friends to spread it (of course they are in the same bet), buy some CDS so the spreads explode showing "someone knows something" and away you go - another 230 foot mega yacht 'earned'.  You can take down a country or a company. ;)  The cost to hire an army of lobbyists to make sure Congress does not take away the ability to shout fire in a crowded building is negligible with 1 trade like this. (of course if you own the building you should be able to buy insurance... it's all those who are buying the insurance who have all the incentive to make sure it burns, which are the issue)

  • BP’s credit default swaps not only surpassed 300 basis points for the first time today, but were approaching “an amazing 400 basis points” notes Markit, despite the fact BP still has a double-A credit rating.
BP CDS are looking positively "AIG like" - someone just made a whole lot of money on this instrument.


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