Raising the Specter of Financial Terrorism
09/19/08 - 06:26 PM EDT
Dan Freed
Market observers have plenty to be puzzled about as of late. The federal government reverses itself and bails out AIG (AIG Quote - Cramer on AIG - Stock Picks). The credit markets suddenly dry up, and the Fed issues more liquidity. Then, the feds unleash a plan to bail out billions of dollars in troubled mortgages.
Amid this backdrop of financial mishaps, the market is having a tumultuous week, falling dramatically, and then recovering to close the week basically flat. Virtually everyone agrees that the events of the past 10 days are unparalleled, but to explain the reasons behind it is even more problematic. Some market observers and participants are not ruling out financial terrorism, although how someone or some group would accomplish that is another puzzling matter. Joe Besecker, president, chairman and CEO of Emerald Asset Management, believes the possibility of financial terrorism has to be considered. He says that he is regularly in communication with professional short-sellers, and they claimed they were not shorting financial stocks heavily enough to push them down as sharply as they went down in the first three days of the week. "It doesn't make sense, the guys like [Morgan Stanley (MS Quote - Cramer on MS - Stock Picks)CEO] John Mack and the people at Goldman Sachs (GS Quote - Cramer on GS - Stock Picks) are saying, 'What the hell's going on here?,' " Besecker says. "We've sent all this money off shore. I want to know who's the real patriots to put these guys out of business?" Besecker says the desks he is talking to are saying a lot of traders are saying a lot of the short trades on the financials were coming over electronic trading networks, which allow people to place bets anonymously. Who's to say a well-funded international or domestic terrorist isn't taking advantage of widespread market fear and exacerbating the situation?
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