Peruse the Reuters article here.
SocGen, France's second biggest bank, said on Thursday that it had been the victim of a massive and "exceptional" fraud by a junior trader resulting in losses of 4.9 billion euros, and announced a large capital increase.
SocGen said the trader, responsible for futures hedging on European equity market indexes, had taken massive fraudulent positions in 2007 and 2008 beyond his authority.
The FTSEurofirst 300, a pan-European stock market benchmark, fell nearly 6 percent on that day, its biggest one-day fall since the attacks of September 11, 2001.
And the U.S. Federal Reserve served up a surprise 75 basis-point interest rate cut on Tuesday, a move that managed to limit declines in U.S. stocks when they resumed trading after Monday's Martin Luther King Day holiday.
The U.S. Federal Reserve cut its discount rate, or the rate at which it lends directly to banks, in August, soon after BNP Paribas, another French bank, spooked investors worldwide by freezing 1.6 billion euros worth of funds due to problems in the U.S. subprime mortgage sector.
Traders speculated that this time round, the travails at SocGen had played a similar catalytic role in the Fed's move.
Said a credit trader in Germany: "It kind of begs the question now, did the Fed cut rates courtesy of a rogue trader at SocGen having to close out a massive position and sending the stock market into turmoil?"
It begs the question whether traders are idiots? Rhetorical question, guys...
This whole article is all bullshit of course, but it's nice to see Reuters joining the nutty conspiracy freaks community. A measly couple billion euroes triggered the American and worldwide stock market run and US recession?
I guess the war in Iraq costing $195 million per day had nothing to do with it all...