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January 13th, 2009
03:02 PM ET

The short squeeze of death

German billionaire Adolf Merckle in Germany on April 26, 2004.

German billionaire Adolf Merckle in Germany on April 26, 2004.

Wayne P. Weddington III
Author and hedge fund manager

Last week, Adolf Merckle threw himself in front of a train.

Merckle committed suicide on Tuesday January 6 2009 in the face of a crumbling financial situation. The German billionaire’s speculation in Volkswagen stock pushed his business empire to the edge of ruin. Last Fall, Mr. Merckle lost hundreds of millions of euros in a speculative battle with Porsche, the sports car manufacturer, to seize control of Volkswagen. Mr. Merckle had lost a sizable bet that shares in Volkswagen would fall, in a financial transaction known as short-selling. The loss of “the low hundreds of millions” does not seem a huge loss compared to an estimated net worth of $9.2 billion (Forbes 2008). But the agony of defeat at the hands of one of the decade’s most aggressive short squeezes proved too much to bear for Merckle. He eventually took his own life.

I am not making light of Merckle’s suicide. As pointed out by Douglas Faneuil on The Huffington Post “though often characterized as the result of some life event, [suicide] is nearly always caused by an underlying mental disorder… 90-95% of those who kill themselves exhibit clear and commons signs of mental illness well before their lives end. Certain tragedies… may trigger an acute depression, which can lead to suicide, but nearly all victims of suicide have… illness.”

Yet the event stands a macabre illustration to the perils of short selling – the short squeeze.

Editor's note: Wayne Weddington is a partner at Brunswick Capital Partners and author of "Do-It-Yourself Hedge Funds: Everything You Need to Make Millions Right Now," Grand Central Publishing


Filed under: 360° Radar • Economy • Global 360° • Wayne P. Weddington III
soundoff (7 Responses)
  1. jim Fallbrook CA

    It is unfortunate that Adolf Merckle committed suicide over financial losses due to the worldwide recession. I still can't beleive he would do it unless he was flat broke

    January 13, 2009 at 6:49 pm |
  2. Barbara in Boston

    I work at a psychiatric hospital. For the past year of foreclosures, we have had increased referrals for people who are pushed to the brink of suicide by financial stress. This isn't just about money. It's about people's self-image as successful persons. They can't tolerate the blow to their sense of self-worth after losing jobs and then their homes. Not all of them have been previously diagnosed with depression or another mental illness.

    The scariest thing has been the increase in impulsive suicide attempts; patients brought to the ER after being found by family or friends after an overdose, cutting their wrists, or attempted hanging. Most of these are not planned - there is no note, or prior statements like "I just wish I could sleep forever."

    Our financial crisis has turned into a mental health crisis and I am afraid that we may not have the nationwide capacity to help all those in need. Our hospital often is under census in the summer. This year it was filled to capacity. The crisis is compounded by the fact that state and federal deficits are leading to budget cuts in all but the most dire services for mental illness.

    I fervently hope that the Obama administration will find a way to give people hope for a better tomorrow, or there will be more stories of people giving way to the ultimate act of despair.

    January 13, 2009 at 6:47 pm |
  3. Annie Kate

    I felt for Merkel, especially when the day after his suicide his companies were bailed out. It seemed so ironic and so senseless. If he had just waited another 24 hours.....he might still be alive.

    January 13, 2009 at 6:31 pm |
  4. Isabel, RJ, Brazil

    Sad end to the businessman after a life of glory and achievements. How would of their despair? Indescribable and impossible to determine.

    Suicide has always been a very delicate. In medicine, classically, was considered a cowardly attitude, of a weak person, that in front of life problems chose flee dramatically rather than confront them.
    Honestly, who diagnosed the suicide this way that is a coward.

    The proximity of someone who decides to blow life leaves all perplexed and asking if anything could have done to prevent such a insane gesture.
    The pain of interminable dilemma for the friends and relatives: why not saw what was happening?? Has it produced any attempt to communication and we do not understand?

    Today, medicine believes the suicide within a context quite different. We know that the brain works at the expense of a number of chemicals that are released to integrate the circuits of neurons called neurotransmitters, which have great importance in the act final of suicide.

    There is a single answer because the path of suicide is the ambiguity. Life and death, are complementary, contradictory, repeating this movement endlessly.

    It's common seeing people defend and encourage the suicide, but they do not consider most of the human drama of those living with suicide in the family or the suicide within itself. For such objections, we must say that it is necessary to draw society to take some responsibility with the suicides, which does not mean encouraging the action, but encourage discussion because the drama life-death is lived by us all, with our reflections loaded feelings.

    January 13, 2009 at 4:47 pm |
  5. Mike in NYC

    @Cindy:

    Why do you say that Merckle was corrupt? Shorting stocks is not illegal.

    January 13, 2009 at 4:09 pm |
  6. Melissa B ~ California

    The real tragedy is that this man committed suicide because of money. I'm quite sure people will make jokes about this but I think it would be in poor taste. So many suffer from mental illnesses; I wish more people could be serious about this subject. Many people do not understand how damaging and painful it is to the the families who have one of their own who suffers from a mental illness.

    January 13, 2009 at 3:27 pm |
  7. Cindy

    While I agree that suicide is done by a lot of people who have prior mental illnesses I do think that these men like Merckle who are doing it now are just doing so because they don't want to face the music of their corruption. Instead they choose to opt out and make their families deal with the fall out of the problems. It's cowardly in my opinion and I don't think mental illness had anything to do with it.

    Cindy...Ga.

    January 13, 2009 at 3:20 pm |