The following is an excerpt from Eleazar David Meléndez | April 20, 2012 | ibtimes.com |
Never let a perfectly good crisis go to waste. That old adage seems to be the motivating wisdom behind the actions of U.S. investors looking to capitalize on the developing debt crisis in Spain.
Those investors might have been better served by another, even more ancient axiom: Don’t tip your hand.
That’s because, in a seeming effort to profit from the latest European disaster, large investors are quietly creating massive hedge positions that could pay off if Spain or large Spanish banks like Banco Santander go under. In doing so, these investors are hiding their activities, avoiding regulatory oversight and skewing the playing field to the disadvantage of ordinary retail investors. Moreover, the investment activity is occurring on a large scale, a fact made clear from an examination of “the tape,” the real-time reports of trades, which show glaring anomalies.
The profit-seeking comes as financial carnage continues to unfold in the Iberian peninsula, with the situation in Spain having become the European crisis du jour.
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