London Whale: The Moby Dick of CDS???

I’ve very much enjoyed reading all the articles in the mainstream media about JPM’s Bruno Iksil.  Mr. Iksil has, according to those reports, earned himself a very cool nickname as the “London Whale” by making some massive CDS plays.  Some folks, I think unfairly, are calling him Voldemort.

I have to confess I was a little disappointed to read in the WSJ this morning that Iksil has apparently ceased and desisted from making further bets presumably due to widespread negative reactions in the marketplace and increased attention from regulators or maybe he was just finished executing whatever his hedging strategy is–I have no idea. Personally, I’m not sure what all the fuss is about.  In free markets, market participants are or ought be allowed to take any positions they like and others should be completely free to do the same, even if some of them happen to drive the markets lower or higher–as long as they are not acting as part of some deliberately manipulative scheme.

Apparently, not everyone feels the same way.  Indeed, the WSJ quotes one would be Captain Ahab as saying “‘I view the entire market as a chess match playing against this guy….’”  According to Bloomberg, various politicians and others have also waded into the fray expressing concerns, among other things, about the potential impotence of the Volcker Rule.

To me this all seems like much ado about nothing.  I hope that all the would be Captain Ahabs of the world keep in mind that messing with Moby Dick doesn’t usually end well.  Sometimes, it’s better not to pursue the whale to the ends of the Earth.

 

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5 Responses to London Whale: The Moby Dick of CDS???

  1. Mr Market says:

    Seriously? “Messing with Moby Dick doesn’t end well?” He’s no Moby Dick. He’s potentially a beached whale. Historically speaking when the market senses a large and highly levered position it will almost invariably test that position. That’s all that is happening, and that’s why he does not like the media attention. To what extent he is levered or not remains to be seen…

    • Noah says:

      Well…it was either that or something lame about Ahab finally getting his whale…..I do try to keep things entertaining and somewhat lighthearted around here although I guess it’s not always obvious when I’m being a bit tongue in cheek. And, for whatever it’s worth, I think the guy who responded to me on LinkedIn calling him the London Guppy is a might bit funnier than the fact that he, as you suggest, may soon come to be a beached whale. More seriously though, if you read my post carefully I think you’ll see that my real reaction to “Moby’s” exploits is basically, what’s the big deal? Fish and chips anyone?

  2. Johnny Come Lately says:

    “I view the entire market as a chess match playing against this guy….’”

    Looks like the market won. Moby Dick just got harpooned, and he didn’t have a proper hedge on, it appears.

    http://online.wsj.com/article/SB10001424052702304070304577396511420792008.html?mod=WSJ_hp_mostpop_read

  3. Pingback: ‘London Whale’ behind JP Morgan’s $2B loss? | Sports, News, Entertainment, US Legislation

  4. Pingback: I guess JPM’s London CDS whale isn’t Moby Dick after all… |

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