From Global Research.
A run on the Northern Rock bank
in Britain has increased the possibility that a mystery trader could
stand to collect around $2 billion should a panic send markets tumbling
during the course of this week, as investors have predicted.
Last month we reported on the mystery trader who risks losing around $1 billion dollars after
placing 245,000 put options on the Dow Jones Eurostoxx 50 index, which
led many analysts to speculate that a stock market crash preceded by a
new 9/11 style attack or another catastrophe could take place before or
during the third week of September.
The anonymous trader only
stands to make money if the market crashes by a third to a half before
September 21st, which is when the put options expire.
Following the run on the
Northern Rock bank in Britain, specialist investors are now warning of
an imminent and severe correction in the markets.
“The credit cycle has turned, bad debts are
soaring, banks will go bust and stock markets will fall much further,”
Ken Murray, the founder and chief executive of Blue Planet Investment
Management, told the Financial Times today, shortly after selling half the equities in his portfolio.
The Northern Rock crisis was
followed by Alan Greenspan's warning that both the US and UK housing
markets are on the verge of a major downturn as Prime Minister Gordon
Brown holds an emergency meeting with US Treasury Secretary Hank
Thousands of people around
Britain queued for hours at Northern Rock branches throughout Friday
and Saturday attempting to withdraw their money as the global credit
crunch sunk its teeth in again following the sub-prime mortgage fallout
in the US.
Analysts from TheStreet.com dismissed last month's so-called Bin Laden trades as nothing out of the ordinary, but still noted that the transactions outstrip anything else seen in a year.
Though the current climate will
undoubtedly send stocks tumbling, to see a downturn of a full third
within a week is unlikely bar a catalyzing outside event like the
announcement of military operations against Iran or a terror attack in
the west on the scale of 9/11.
Mystery trader bets on huge downturn
that could only be preceded by catastrophe
Paul Joseph Watson – Prison Planet
A mystery trader risks losing around $1 billion
dollars after placing 245,000 put options on the Dow Jones
Eurostoxx 50 index, leading many analysts to speculate that
a stock market crash preceded by a new 9/11 style catastrophe
could take place within the next month.
The anonymous trader only stands to make money
if the market crashes by a third to a half before September
21st, which is when the put options expire. A put option is
a financial contract between two parties, the buyer and the
writer (seller) of the option, in which the buyer stands to
benefit only if the price of the asset falls.
“The sales are being referred to by market
traders as “bin Laden trades” because only an event
on the scale of 9-11 could make these short-sell options valuable,”
financial blogger Marc Parent. Dow Jones Financial News
reported on the story.
The trader stands to make around
$2 billion from their investment should an event trigger
a market crash before the third week in September.
Such a cataclysmic jolt could only happen as
a result of two factors, China dumping its vast dollar reserves
in reaction to the sub-prime mortgage collapse, which
it has threatened to do, or a massive terror attack on
the same scale or larger than 9/11.
itself was foreshadowed by unprecedented put options that
were placed on United and American Airlines. Though the Securities
and Exchange Commission refused to reveal who placed the options,
researchers traced the investments back to the Deutsche
Bank owned Banker’s Trust, which was formerly headed
by then Executive Director of the CIA, Buzzy Krongard.
Put options on Morgan Stanley and Merrill Lynch,
two of the World Trade Center's most prominent occupants,
also spiked in the days before 9/11.
News of the suspicious trades is dovetailed
by the comments
of Former US Treasury secretary Larry Summers yesterday,
who told ABC News that the risk of a recession in the U.S.
was greater that at any time since 9/11.
Makes you think eh?
Interesting to note that the UK Treasury has been a big buyer of US Treasury bonds in the last 6 months, bucking the market trend. Most of the UK Gold that Gordon Brown had sold at the bottom of the market early in his tenure at No.11 was also converted into US Treasury bonds. (US T bonds were a huge winner after 9/11).