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View Diary: BP Catastrophe Liveblog Mothership: #19 (83 comments)

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  •  The concern from london is about the bankers (5+ / 0-)

    The pensioners are going to taking a hell of a hit, no matter what the stock price does. I suspect that the banks' out-cry has little to do with the impact on pension contributions, which are going to should fall by ~1/6 as all profits are sunk into the clean-up. (Besides, the UK pensions have systemic problems related to population. )

    The back story is probably that the banks have taken bets and used BP's "blue chip" status to secure them. If you made a billion dollar bet , and secured it with a billion dollars in BP stock (which is what investment banks are all about), the falling price will force you to make up the difference with more collateral. In the last year, BP's stock has gone from a $60.48 (April 20/2010) to a low of 29.20 (yesterday's close). To put up a million dollars of collateral in BP stock on April 20, 2008, you had to have 16,534 shares. Today, those shares are worth $482,792 so you have to find another $517,207 in collateral to cover you bet. If you can't, you have to sell the bet until it balances out.

    --- Perma-ban or bust. - opendna

    by opendna on Sun Jun 13, 2010 at 06:04:04 AM PDT

    [ Parent ]

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