Posted on 10/22/2011 4:55:46 PM PDT by dennisw
OWS is here to save the day.
Or, haven’t you heard?
What the H is going on? Whatever it is, it ain't honest. This regime knows no honesty.
When they crash, at least there will be a surge in temp jobs.....for robo-signers. The junk mortgages will have to be dumped on someone else.
You know they don't understand derivaitves. They still don't have a working grasp of soap yet either.
I have never quite understood why it is that a few rich bankers get to make billions (or trillions) making their deals, while we average taxpayers are forced to bail them out by frantic politicians on the take ostensibly to save the economy.
These decisions always make them rich again and put our USA taxpayers deep into debt and on the hook, all because of their incompetence and greed. I truly hate paying for someone else’s incompetence.
I frankly don’t understand it, and do favor sending them to Gitmo for life as financial terrorists, but will await an explanation from those in the know who understand the ins and outs of Wall St and the worth of these investment bankers to our economy and the rest of society.
If it comes down to creating capital for new business I’m all for it. Instead I see it creating huge profits for financiers.
In a nutshell, a derivative is a financial insurance policy. They are typically cheap because they reflect the (typically very low) probability of the insured condition coming to pass. Derivatives are typically used as hedges to other bets.
That being said, if the “improbable” happens, there won’t be enough $$ in the world to pay these off. The Banks that sold them look at it as free $$, but G-d help them if the bill comes due. Kinda like a bookie to who can’t pay off his bets.
At some point the whole derivative market should be shut down. If all they are are bets - example I bet someone a trillion dollars the Packers win the next superbowl and I lose and don’t pay, does it really matter to the economy. Sure the winner is out a trillion dollars but it’s phony. No one is really out anything.
Derivatives? Old news.
Having stolen all the real capital, how much of the Feds monopoly money are the banks using to finance OWS?
Financial regulation probably isn’t the answer. Law of unintended consequences, etc.
The Feds need to outlaw national banks and return the control to each of the individual 50 states! No bank is allowed to cross state lines, nor is any bank allowed to hold any interest in other state banks. Very drastic I know, but probably too late for what is inevitably coming. America is doomed!
Can you tell me where to find a list of the different derivatves?
Can you or I trade some derivatives?
Where are their prices listed?
Do some mutual funds invest in derivatives?
Gotta love your attitude Auntie Mame!
“Life is a banquet and some most poor suckers are starveing to death”
You go girl!
From what I understand, you can buy a derivative on almost anything. To buy them, you have to be plugged into the Financial community. While I can trade stocks/bonds online, I don’t have nearly the level of sophistication (or access) to trade derivatives.
So....sorry. Suggest you try someone who works for a hedge fund if you’re really interested.
“there won’t be enough $$ in the world to pay these off”.
There already is not enough to pay them off. The Bank of Intl Settlements (BIS) receives voluntary reports on the amount of derivatives world-wide. The derivatives are long term borrowings (as long as 30 years as with mortgage backed securities), and credit default swaps insure the other derivatives. All derivatives have essentially no adequate capital behind them. Multiple credit default swaps (Ponzi) exist on the same notionally valued equity as “naked” insuring is allowed in the completely unregulated derivative adventure with short term interest due during rollover periods on long term debt obligations.
The BIS up to two years ago reported the risk period for interest adjustment rollovers at 5 year intervals, and then reduced it to 2.5 year intervals...the recent reports of $700T of derivatives represents only half of the former 5 yr period total. So, over the usual short-term rollover period of 5 years, there are really about $1.5Quadrillion of derivatives. There will be 6 5-year rollover periods over 30 years. The 2008 rollover can go to 2013 for completion of the first rollover period. THE WORLD IS NOT GOING TO MAKE IT FOR THE FIRST OF THE SIX short 5 yr term rollover periods. Here is why:
The world GDP, generously, is about $68T this year, and assuming a 20% world tax base in the best of circumstances, there is only a maximum $13T world-wide tax base for running governments, etc. and guaranteeing bank losses on derivative values as is best demonstrated in this country ($16T went out for bank interest payment bailouts on derivative bond losses 2008-2010).
The $1.5Quadrillion of world-wide derivatives, say at 1% interest due each year and paid by the end of the 5 year periods, $15Trillion a year, or $75Trillion each 5 years out to 30 years, fully exceeds the entire tax base of this planet. The world will not make it. Over 30 years the total interest due at a conceptual 1% on the current “book” of derivatives world-wide approaches
5 x $75T = $375Trillion.
There are about $5B ounces of gold on the planet’s surface that is known. At $1000 an ounce, it is worth $5Trillion. Is it useful to use it as a standard for underwriting $1.5Quadrillion and growing of credit derivatives?
One additional problem is that derivatives and their additionally piled on insurance policies are growing, and the bankers and investment houses wish to add even more derivatives not seeing that there must be an end point.
“Is BOA the fall guy?”
This could well be the case.
When all of this came down, I saw an interview with the then CEO of BOA. I don’t remember the guy’s name...he is no longer CEO.
He indicated that BOA was forced to take government funds during this time. And “help” out with the other troubled entities.
I’m no fan of BOA, but if this guy was truthful..it really doesn’t seem right.
Have a few of those banker and politician dudes explain themselves with a hemp noose around their necks standing on the scaffold and their descriptions of derivatives would be more straight forward
Burn, baby, burn.
Basically, the whole world has become Iceland, who had, what, 900:1 leverage in their banks.
Can you say crash? I knew you could.
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