Posted on 09/27/2008 9:13:31 PM PDT by Porterville
There were probably CDS hedges out on that scenario as well... ;-)
As you said, the 'wave' is devouring everything in the financial marketplace. Paulson can't stop it no matter what. If he's not careful, he will exacerbate the problem greatly by inadvertently causing more defaults.
I do hope history remembers that.
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I just skimmed the beginning of your article but will look at it in the light of day. I saw you had an analogy of a car wreck - so perhaps I'm on the right track.
“What people do not realize is that Paulsons proposal is to bail out foreign banks also, and that Fortis Bank in England is bankrupting this weekend.”
Correction: Fortis is incorrect. Bradford and Bingley is the correct English bank. Fortis, a huge Belgian Bank, is failing this weekend also.
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marker
The Credit Default Swap (Derivitives) are backed up by only 1 thing.....the promise to pay for the losses, if certain default criteria are met. It is backed by a piece of paper, and I do not mean Federal Reserve Notes. When called upon to perform according to their agreement with distressed banks, they simply say, they can not pay. Then every other entity who wrote "insurance derivitives" with that company scramble to get liquied, but news moves faster than sales....so.........the system starts crumbling.....That is why AIG was bought (79.9%) by the government. This cannot be stopped now. Our government has alreadby spent $700 billion, and is asking for another $700 billion.....it will be to no avail. This country just spent its way out of existence.
I heard today there was a run on the Fortis BAnk.
*BUMP* ! . . . Thanks for posting that helpful info !
If just 10% of CDS underlying risks go bust, somewhere in the financial system there will be $5 trillion in losses . . .
I want to remind all freepers and lurkers that approximently 40% - 50% of mortgages are unenforceable through foreclosure Why ___ ?
The debt paper (i.e. mortgages) are seriously flawed. Lenders sold, resold, resold and resold toxic paper to the whole world. In some cases, the notes were forged outright and sold with criminal intent to defraud. Every time a note was sold more than once the net effect was the same as selling a forgery. This bailout will reward criminals !
Therefore, a more realistic picture is that 40% - 50% of all CDS risk is itself toxic !
Do the math yourself. This will end badly regardless of what Congress does with this bailout legislation.
Dubya's fault? I doubt it...
Greenspan exacerbated the problem with his absolutely horrific monetary policy errors (late 90's with deflation and now the inflation we enjoy today). He deserves a whole lot of the blame.
No he doesn’t.
I have no idea, but I know one thing. The overwhelming majority of these traders are big-time contributors to the DNC.
Great response...way to back it up...
Your welcome.
Senator GREGG (May 21, 2008) Remember: Probably the biggest threat we face as a nation--fiscal threat--in fact, the biggest threat after, in my opinion, the threat of Islamic fundamentalism and the terrorists using a weapon of mass destruction against us--is the impending economic meltdown of this country as a result of the burden that our generation, the baby boom generation, is putting on the next generation through the entitlement accounts. There is $66 trillion of unfunded liability, $66 trillion--a huge number. Nobody knows because it is hard to define what $1 trillion is. But if you take all the taxes paid since the beginning of this Republic--I think you are talking about something like $37 trillion--and if you take all of the net worth of the American people--all their cars, all their homes, all their stock--and add it together, you come up with something like $45 trillion.
Check too, the budgeted revenue for running the US government. The budget plans HUGE increases in revenue - increases that depend on maintaining a "value bubble," or else the income and resulting economic activity and taxation will not materialize.
Congress is eventually going to lose its grip on the economy. It is inevitable. None of the current occupants want to be there when it happens.
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