09/28/2008

Is Fortis speculation a dump and jump scam ?

Friday EUROPE MOST ACTIVE BY VOLUME (Bloomberg.com)
 PRICE% CHANGEVOLUME
VODAFONE GROUP126-1.41195898256
UNICREDIT SPA3.26-4.12182889796
FORTIS5.36-16.51167608377
ROYAL BK SCOTLAN208-5.67160489044
TELECOM ITALIA S1.132.54125785119
INTESA SANPAOLO4-3.1595652586
BANCO SANTANDER10.85-0.7393062410
LLOYDS TSB GROUP251-8.1473559125
GLITNIR BANKI HF15.7-0.9570540029
BARCLAYS PLC366.5-0.9569112349

The question will be if the solution will be enough, if it will be convincing enough. It seems that not only the governments, but also the European Central Bank and the European Commission seem to have understood that this first full-scale attack on an European Bank has to be stopped and that they can only do this together. The question to ask is if at the time of the opening of the asian markets, the measures will be enough or better, the defenses put into place will be enough to respond to speculative waves of selling of stock.

We could maybe call this 'dump and jump' scams instead of the 'jump and dump' scams. In the last one the tactic was to hype up a stock (mostly unknown but so called promising) through spam and to dump it at its highest price just before it is known to be a scam. In this case you dump as much as you can and try to get others to do the same, just to jump in and buy stock at a much lower price when you can expect governments and private partners to step in to salvage the stock or financial institution and get a much higher price for it.

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