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In a pump and dump scheme, usually an actor owned the instrument that was being "pumped". In the 2008 crisis, there were a large number of groups that was benef

In a pump and dump scheme, usually an actor owned the instrument that was being "pumped". In the 2008 crisis, there were a large number of groups that was benefiting from the situation. A guy on Wall Street didn't own the houses that were being bought, nor was he directly lending the money for them.

wu-ikkyu 9y ago
>A guy on Wall Street didn't own the houses that were being bought, nor was he directly lending the money for them. Right, it wasn't "a guy", it was banks like Goldman Sachs. My question remains: if a pump and dump scales up to where "a large number of groups" benefit, rather than just "a guy on wall street", is it no longer considered a "pump and dump"?
- Goronmon 9y ago
  What would you consider being the "dump" side of the housing market collapse?
  - wu-ikkyu 9y ago
    The housing market itself. All the people who lost their houses, jobs and the lost life savings and pensions which were invested in said market.
- JumpCrisscross 9y ago
  > if a pump and dump scales up to where "a large number of groups" benefit, rather than just "a guy on wall street", is it no longer considered a "pump and dump"? Not every fraud is a pump and dump, and not every stupid investment sale and purchase is a fraud. Most of 2008 was stupidity, not fraud. (Some was plain fraud.) In any case, the pump and dump rules worked. Pump and dumps are trivial to organize. Draconian punishments raise the bar of minimum competence from script kiddies on a message board to LIBOR traders co-ordinating across banks. The complexity of the latter over the former means (a) it's harder to do (b) it's even harder to get away with it and (c) when you get caught, you can be found and fined and jailed. Post-crisis, rules surrounding swaps and securitisations were modernized and re-written. Our financial system has changed in response. (Banks are, largely, more boring.)
- tikkabhuna 9y ago
  A "pump and dump" scheme is planned around the dump. It is started with the intention that the instrument will be sold with the knowledge that it will have a negative impact on that instrument's price. The group doing the pumping knows what's coming. In 2008 banks didn't want it to happen. They would have happily kept doing what they were doing forever. Home buyers would have been happy buying more houses, real estate agents would have been making commission, mortgage lenders getting interest. Happy days! There was negligence all round and the situation was unsustainable. Do you think the banks wanted it? Some foresaw the collapse and made money out of it but it cost the banks billions, ruined reputations, people lots their jobs. Yes, they got bailed out but they would have preferred to have not needed it in the first place.

wu-ikkyu 9y ago

>A guy on Wall Street didn't own the houses that were being bought, nor was he directly lending the money for them. Right, it wasn't "a guy", it was banks like Goldman Sachs. My question remains: if a pump and dump scales up to where "a large number of groups" benefit, rather than just "a guy on wall street", is it no longer considered a "pump and dump"?

Goronmon 9y ago
What would you consider being the "dump" side of the housing market collapse?
- wu-ikkyu 9y ago
  The housing market itself. All the people who lost their houses, jobs and the lost life savings and pensions which were invested in said market.
JumpCrisscross 9y ago
> if a pump and dump scales up to where "a large number of groups" benefit, rather than just "a guy on wall street", is it no longer considered a "pump and dump"? Not every fraud is a pump and dump, and not every stupid investment sale and purchase is a fraud. Most of 2008 was stupidity, not fraud. (Some was plain fraud.) In any case, the pump and dump rules worked. Pump and dumps are trivial to organize. Draconian punishments raise the bar of minimum competence from script kiddies on a message board to LIBOR traders co-ordinating across banks. The complexity of the latter over the former means (a) it's harder to do (b) it's even harder to get away with it and (c) when you get caught, you can be found and fined and jailed. Post-crisis, rules surrounding swaps and securitisations were modernized and re-written. Our financial system has changed in response. (Banks are, largely, more boring.)
tikkabhuna 9y ago
A "pump and dump" scheme is planned around the dump. It is started with the intention that the instrument will be sold with the knowledge that it will have a negative impact on that instrument's price. The group doing the pumping knows what's coming. In 2008 banks didn't want it to happen. They would have happily kept doing what they were doing forever. Home buyers would have been happy buying more houses, real estate agents would have been making commission, mortgage lenders getting interest. Happy days! There was negligence all round and the situation was unsustainable. Do you think the banks wanted it? Some foresaw the collapse and made money out of it but it cost the banks billions, ruined reputations, people lots their jobs. Yes, they got bailed out but they would have preferred to have not needed it in the first place.