If I had to give a prize to the craziest financial story of the year this one would win it. Look at what is going on right now. Morgan Stanley shares are down 26% and Goldman Sachs 11% because Volkswagen shares are up 90% today and up from 200 euros to 900 euros in the last 2 days. Indeed Volkswagen was today the most valuable corporation in the world. It is worth now $353 bn or 100 times more than GM and 12 times more than Boeing. All this when the car industry is suffering from a serious recession already.
How did the share price go up like this? It got there by squeezing the banks and hedge funds who were massively shorting the stock against a tiny free float. It got there thanks to Porsche SE who wants to buy it and was on the other side of the short trades buying an enormous amounts of options a move that is being widely criticized. This type of car industry consolidation should be good news. With the economy the way it is it is clear why a luxury car company like Porsche may want to buy the "people´s car company". In the years ahead Beetles should outnumber Boxers in the streets of the major cities around the world. But the problem is that now, the "banks r us", all of us taxpayers. And when the banks lose we all lose. Can somebody please stop the traders gambling with our money? Can´t we effectively link bailout plans to effective deleveraging and compensation controls?