Roubini Is Right

September 17, 2010

While I’ve occasionally disagreed with Nouriel Roubini’s prescriptions for our economic woes, I have to say that he’s right, but several years late, in his Washington Post Op-Ed today.

I tried planting this exact idea (except as a full “holiday”) during the summer of 2008, when a stimulus plan was being floated by the Bush Administration.  I even called a couple of reporters and a friend who is a Fellow at the American Enterprise Institute to say they should slip the idea into the mix of things being discussed as we went from bad to worse in the subprime crisis.

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Arena Postscript

September 17, 2010

When I heard that people were paying 65% to borrow ARNA shares to sell short, I knew that others were probably selling short without borrowing.  I also knew that my odds of winning on the trade just got much worse.  I had seen this movie before, after all.

But sometimes the movie has a surprise ending, where the company survives and investors who stayed with it actually get rewarded (DNDN).  Problem is, that happy ending may take years to happen, and my short strangle options expire tomorrow.

So, I will end up owning a big slug of Arena shares tomorrow unless I buy out those puts, and the lawyers have already started picking at the corpse in their race to the courthouse claiming fraud, even though the company is protesting like the Monty Python plague victim that they aren’t dead yet.

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