Rothschild Is Now In TBTF Plunge Protection Business
Paging Ray Parker Jr. with a remix request:
When some evil fund,
Is out there shorting you
Who you gonna call?
Following the already failed attempt by captured pan-European regulators to stop the local bank Friend-o treatment by instituting a short-selling ban, whose effectiveness as we pointed out lasted, oh, about 7 days, we find just what Plan B is. And, yes, Rothschild is involved. From the WSJ: "Societe Generale SA, whose shares have come under severe pressure in recent weeks, said Tuesday that it had signed a liquidity contract with Rothschild & Cie. to prevent excessive volatility in its stock price." That's right: Rothschild is now in the Plunge Protection business. And they all have the ECB to thank for it: after years of not learning from the New York Fed-Citadel Joint Venture, which "never" steps in at precisely the right time (wink wink), they have opened the market for third party PPT incursions. It only seems fitting that the bank that started it all, would step in and fill the void. Because after all if SocGen falls, Rothschild will sooner or later follow. That said, the official explanation is worth its weight in laughter: "The idea is not to keep the stock price high, but rather to keep it steady" a representative for Societe Generale said. After hearing such... brilliance... what really is there to say?
From the WSJ:
Societe Generale shares were hammered Aug. 10 amid unfounded rumors about its financial position after a British tabloid published an article alleging that the bank was in a "perilous" state. Its shares have lost 44% over the past month; at one point on Aug. 10 its stock was down more than 20%. The bank has called the rumors ludicrous and has underscored its strong financial position.
Analysts said that liquidity contracts in France are relatively common. Twenty-one of the CAC-40 companies have liquidity contracts with various financial institutions to prevent excessive volatility in their stock price. Rothschild has seven such contracts with CAC-
40 companies, including with GDF Suez.
Companies in France are allowed to buy and sell their own shares to prevent swings in prices, although the activity is regulated by French market regulator Autorite des Marches Financiers. According to a Paris-based analyst, Societe Generale until 2009 had a liquidity contract with one of its subsidiaries.
Analysts said the arrangement with Rothschild won't necessarily insulate the stock against big moves.
Well, unless Rothschild somehow found a way to avoid "the inevitable" from occurring, we would say we agree with that assessment 100%. But first, blogs which "plant" stories are sure to take the blame. That, or Dubya. After that, we go bidless.