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Keyword: derivatives

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  • Don't come looking at Gramama Obama's Bank

    04/26/2010 7:19:26 PM PDT · by tutstar · 93 replies · 2,309+ views
    lame cherry ^ | Sept 28 2008 | lame cherry
    Tucked away on the 10th floor of South Beretania apartments in Honolulu, Hawaii is quite a woman, the one engineered profile online suggests for Madelyn Lee Payne Dunham, the grandmother who raised Barack Hussein Obama when he was abandoned by his mother, but for the wonder woman profile which was created online, the one question jumps out that no one has noticed: If Madelyn Dunham was thee woman as her profile states who paved the way for all women in banking, thee woman who raised Barack Obama, then why is Barack Obama running away from this woman, why is she...
  • Buffett swings derivatives reform

    04/26/2010 6:35:55 AM PDT · by throwback · 4 replies · 296+ views
    ftalphaville.ft.com, WSJ ^ | Apr 26 | Paul Murphy, DAMIAN PALETTA, SCOTT PATTERSON
    Lobbying by Warren Buffett’s Berkshire Hathaway on proposed financial reform as it impacts the treatment of derivatives has helped the famed investor avoid a financial hit, the WSJ claimed. Derivatives reform has been folded into broader legislative measures, senior Democrats told the paper.
  • Next bubble: $600 trillion derivatives? (Cities, states, universities could sink from meltdown)

    04/22/2010 9:48:31 AM PDT · by SeekAndFind · 27 replies · 1,237+ views
    Worldnetdaily ^ | 04/22/2010 | Jermone Corsi
    <p>As interest rates begin to rise worldwide, losses in derivatives may end up bankrupting a wide range of institutions, including municipalities, state governments, major insurance companies, top investment houses, commercial banks and universities.</p> <p>Defaults now beginning to occur in a number of European cities prefigure what may end up being the largest financial bubble ever to burst – a bubble that today amounts to more than $600 trillion.</p>
  • Brooksley Born Excoriates Alan Greenspan: “You Failed”

    04/07/2010 5:53:20 PM PDT · by dangthis · 174 replies · 1,869+ views
    FDL News Desk ^ | Wednesday April 7, 2010 | David Dayen
    "At today’s Financial Crisis Inquiry Commission hearing, Brooksley Born, the former head of the Commodity Futures Trading Commission, declared Alan Greenspan’s tenure at the Federal Reserve an unmitigated failure – to his face. Greenspan accords a certain degree of respect on Capitol Hill, despite Born’s accurate take on his many failures, and so this outburst was highly unusual – and gratifying. Born, who pushed to strictly regulate derivatives under the Clinton Administration, but lost the battle to, among other people, Alan Greenspan, told the former Federal Reserve chair that his agency “failed to prevent housing bubble, failed to prevent the...
  • Investors can soon make bets on movie box office (Financial Exchange for Movie Derivatives)

    03/11/2010 7:33:44 AM PST · by SeekAndFind · 15 replies · 1,226+ views
    Los Angeles Times ^ | 03/11/2010 | Nathaniel Popper and Ben Fritz
    Two new futures exchanges will let studios spread the financial risk of creating films. Welcome to Hollywood's newest version of risky business: movie derivatives. Two trading firms, one of them an established Wall Street player and the other a Midwest upstart, are each about to premiere a sophisticated new financial tool: a box-office futures exchange that would allow Hollywood studios and others to hedge against the box-office performance of movies, similar to the way farmers swap corn or wheat futures to protect themselves from crop failures. The Cantor Exchange, formed by New York firm Cantor Fitzgerald and set to launch...
  • Goldman Sachs, Greece Didn’t Disclose Swap Contract

    02/17/2010 11:54:41 AM PST · by the invisib1e hand · 2 replies · 220+ views
    QuantNet ^ | 021710 | Elisa Martinuzzi
    Goldman Sachs Group Inc. managed $15 billion of bond sales for Greece after arranging a currency swap that allowed the government to hide the extent of its deficit. more at link.
  • Wall Street’s Euro Scams (secret derivatives deals behind the euro crisis stay secret)

    02/17/2010 8:49:45 AM PST · by SeekAndFind · 6 replies · 479+ views
    Newsweek ^ | 02/17/2010 | Mark Hirsh
    Behind each great historical phenomenon," Niall Ferguson has written, "lies a financial secret." So it is with Europe's latest identity crisis. Greece's euro troubles have a lot to do with its fiscal irresponsibility and the instability at the heart of European Monetary Union—a group of countries that sometimes behave like "the United States of Europe" and at other times revert to nationalistic petulance (witness German resistance to a Greek rescue). But the Greek panic—and fears of a euro collapse and another financial contagion—also have a great deal to do with secret derivatives deals orchestrated by big American banks. As a...
  • Federal Reserve Moral Hazard Smoking Gun: Goldman Was Willing To Tear Up AIG Derivative Contracts

    01/26/2010 4:45:12 AM PST · by mikelike · 19 replies · 665+ views
    Zero Hedge ^ | 1/25/10 | Tyler Durden
    {snip} In tonight's Heard On The Street section, the WSJ notes: As everybody knows, AIG got a huge government bailout in September 2008 to help make payments on derivatives contracts with banks, including Goldman. Yet in the previous month, Goldman approached AIG about "tearing up" its contracts, according to a November 2008 analysis by BlackRock, then an adviser to the New York Fed. So was Goldman prepared to offer AIG a haircut in the month before its rescue? A legitimate question, given that Goldman refused to accept such a cut when the New York Fed raised the idea after it...
  • Deriving the Truth - Brooksley Born wants the public—and Wall Street—to understand unregulated...

    01/18/2010 4:21:48 PM PST · by neverdem · 6 replies · 447+ views
    City Journal ^ | 14 January 2010 | Nicole Gelinas
    Brooksley Born wants the public—and Wall Street—to understand unregulated derivatives’ role in the crisis.At yesterday’s Financial Crisis Inquiry Commission hearings, Brooksley Born, one of the 10 commissioners on the Congressional panel, didn’t use her time taking cheap shots. Born, who ran the Commodity Futures Trading Commission (CFTC) under President Clinton, asked modest questions of Goldman Sachs chief Lloyd Blankfein. The details that she tried to uncover are the financial crisis, distilled. Born confined her questioning to inadequately regulated, or “over the counter,” derivatives. It’s easy to see derivatives as peripheral to the “mortgage crisis,” but they were actually central to...
  • Chinese firm beats Morgan Stanley out of most of its derivatives claim

    01/12/2010 11:55:42 AM PST · by FromLori · 1 replies · 338+ views
    GATA ^ | 1/7/10 | cpowell
    Morgan Stanley has ended a confrontation with a Chinese company over disputed hedging contracts in an out-of-court settlement that may be a model for ending similar disputes involving mainland enterprises. The Morgan Stanley dispute with China Haisheng Juice Holdings was the most public of many between foreign investment banks and dozens of mainland Chinese companies over lossmaking derivatives deals. The scale of the losses in the wake of the financial crisis triggered a clampdown on derivatives by regulators in Beijing and criticism of the practices of foreign banks. The two companies have agreed to end legal proceedings over renminbi-dollar hedges...
  • JP Morgan and Goldman Sachs Trillions Deep In Derivatives or Dumbed-Down Reporting?

    12/30/2009 5:16:02 PM PST · by FromLori · 19 replies · 807+ views
    Market Oracle | 12/30/2009 | Rob Kirby
    On December 29, 2009 The New York Post [josh.kosman@nypost.com] published an article titled, Deep in derivatives, where scribe Josh Kosman ‘took-a-shot’ at explaining the ABSURDITY of the bind boggling derivatives positions amassed by financial behemoths such as J.P. Morgan Chase and Goldman Sachs. In an attempt to explain how dangerously systemically-interconnected derivatives makes ALL banks, Kosman began; “The amounts are so large that if the swaps and other derivative contracts the banks broker go bad because the parties on either side of the deal collapse, the banks could be in trouble.” Kosman then goes on with some very superficial analysis...
  • Small Chinese Company Tells Goldman To Take A Hike, Refuses To Pay $80 Million In Derivative Losses

    12/29/2009 2:57:19 PM PST · by FromLori · 14 replies · 1,317+ views
    Zero Hedge ^ | 12/29/09 | Tyler Durden
    It appears that even after thoroughly dominating the US legislative, judicial and executive branches, the long tentacles of the squid have been no better than the Mongolian hordes at overcoming the Chinese Wall (which is ironic seeking how easy it is to ignore the same construct internally between the firm's prop and flow traders...and yes, we will be posting our response to Goldman shortly, we have not forgotten). In the meantime, half a world away, a small Chinese power generator, Shenzhen Nanshan Power, is blatantly refusing to honor contracts with Goldman Subsidiary J. Aron for $80 million in derivative losses,...
  • Not All Banks Are Created Alike

    12/20/2009 9:55:33 AM PST · by FromLori · 7 replies · 395+ views
    WSJ ^ | 12/19/09 | ROBERT G. WILMERS
    Congress is moving rapidly toward new financial-services regulation, focused on limiting the sort of "systemic risk" said to have helped bring on the current recession. But we are also in a period where there is great concern about the limited availability of credit to fund companies whose growth could bring down the country's persistent high unemployment. Any new regulation of the financial industry must distinguish between firms engaged primarily in speculative trading and lenders linked to the real economy of Main Street. The great danger is that regulation of the former might inadvertently strangle the latter. Today, not all institutions...
  • Rob Johnson: Too-Big-To-Fail Dragon Not Slain in House Financial Regulatory Reform Bill

    12/13/2009 6:50:53 PM PST · by WashingtonSource · 5 replies · 374+ views
    Mind Over Market ^ | December 13, 209 | Robert Stowe England
    In the financial regulatory overhaul bill that passed the House December 11, insufficeint regulation of over-the-counter (OTC) derivatives 'renders impotent' the enhanced resolution powers aimed at making sure large financial institutions are not too big to fail, according to economist Robert Johnson
  • Carbon capitalists warming to climate battle using derivatives (a new financial industry)

    12/08/2009 10:36:54 AM PST · by SeekAndFind · 13 replies · 475+ views
    Economic Times ^ | 12/8/2009
    Across Uganda, thousands of women warm supper over new, $8 orange-painted stoves. The clay-and-metal pots burn about two-thirds the charcoal of the open-fire cooking typical of East Africa, where forests are being chopped down in the struggle to feed the region’s 125 million people. Four thousand miles away, at the Charles Hurst Land Rover dealership in southwest London, a Range Rover Vogue sells for £90,000 pounds. A blue windshield sticker proclaims that the gasoline-powered truck’s first 45,000 miles (72,421 km) will be carbon neutral. That’s because Land Rover, official purveyor of 4x4s to Queen Elizabeth II, is helping Ugandans cut...
  • Understanding Climategate's "Hidden Decline"

    12/06/2009 9:41:43 AM PST · by thought · 33 replies · 1,360+ views
    American Thinker ^ | 12/6/2009 | Marc Sheppard
    Close followers of the Climategate controversy know that much of the mêlée surrounds an email in which Climate Research Unit (CRU) chief Phil Jones wrote about using “Mike’s Nature Trick” (MNT) to “hide the decline.” And yet, 17 days and thousands of almost exclusively on-line op-eds into this scandal, it still seems very few understand exactly which “decline” was being hidden, what “trick” was used to do so, and why Jones’s words have become the slogan for the greatest scientific fraud in history. As the mainstream media move from abject denial to dismissive whitewashing, CRU co-conspirators move to Copenhagen for...
  • Chinese official raps US banks on derivatives

    12/04/2009 3:12:48 PM PST · by Mr. Jeeves · 4 replies · 273+ views
    AsiaLynx.com (ChinaDaily.com) ^ | 12/4/2009 | Agencies
    A senior Chinese official criticized foreign banks for selling derivatives with “fraudulent characteristics” that led to heavy losses for state-owned airlines and other companies. “Some international investment banks are the biggest villains,” said Li Wei, deputy chairman of the agency that oversees China’s biggest state companies, in a commentary in this week’s edition of the Study Times, a newspaper published by the school of the Communist Party’s Central Committee. The comments were the Chinese government’s most pointed public criticism yet of foreign institutions. Li’s agency said in September it would support companies that want to challenge the contracts in court....
  • China denounces U.S. banks for 'evil intent' with derivatives

    12/03/2009 3:05:12 PM PST · by FromLori · 12 replies · 631+ views
    GATA ^ | 12/3/09
    A senior Chinese official who oversees the country's largest state-owned enterprises has publicly slammed Western investment banks for "maliciously" peddling complicated derivative products that caused huge losses for Chinese companies over the last year. In Beijing's strongest criticism on the matter to date, Li Wei, vice director of the state-owned Assets Supervision and Administration Commission, singled out Goldman Sachs, Morgan Stanley, Merrill Lynch, and Citigroup in a long and highly critical article in the latest issue of an official Communist party newspaper. The large losses suffered by Chinese state companies were "closely associated with the intentionally complex and highly leveraged...
  • Frontline PBS Show Live Thread (Airing 9:00 Central) Vanity

    10/20/2009 7:19:04 PM PDT · by bushwon · 13 replies · 859+ views
    PBS | 10/20/09 | bushwon
    Frontline PBS TV program on Greenspan; mentioned Alan Greenspan as student of Ayn Rand...Thots.
  • THE KILLING OF MICHAEL MALLOY

    10/06/2009 8:44:22 AM PDT · by parsifal · 15 replies · 1,138+ views
    Trivia Library ^ | Historical | Irving Wallace
    He was--at least up to a point--the most durable human being in American history, possibly in world history. Over 30 attempts were made to murder him. He survived them all. He was truly incredible. His name was Michael Malloy, and he was a bleary-eyed, unsteady diminutive Irishman originally from County Donegal. While his insurance policy would later falsely give his age as 45, he was actually 60 years old. Once, in better times, he had been a fireman, but now in 1933 his almost full-time occupation was alcoholic.
  • Wall Street Vultures Betting on Death: If You Die Early, They Cash In (repackaging life insurance)

    09/06/2009 7:40:48 PM PDT · by SeekAndFind · 29 replies · 1,999+ views
    Chattah Box ^ | 9/6/2009
    Since the near collapse of Wall Street from the sub-prime mortgage crisis, traders have been jonesing for a return to the adrenaline rush they once enjoyed from the slew of exotic financial instruments cooked up in the dark recesses of special hedge fund units. And according to a piece in the New York Times, they have found it with a ghoulish scheme gambling on death, by repackaging life insurance policies sold for a fraction of their worth by sick and desperate elderly people. Once people die, the investors make money. And it’s much more profitable if you die sooner rather...
  • Buffett: We Screwed Up

    08/13/2009 1:03:41 PM PDT · by FromLori · 16 replies · 1,031+ views
    As cool as his demeanor is, you really have to figure that Warren Buffett had stuck to his strict, no-derivatives-for-me attitude he seemed to hold all that time. Reuters: Warren Buffett's Berkshire Hathaway Inc underestimated the risks of falling stock prices to its billions of dollars of derivatives bets, yet still believes it is valuing the contracts fairly. Berkshire revealed its error in a June 26 letter to the U.S. Securities and Exchange Commission, one of several pieces of correspondence with the regulator about the company's annual report, and made public on Thursday. The key issue: The derivatives contracts are...
  • Five Firms Hold 80% of Derivatives Risk, Fitch Report Finds

    07/28/2009 7:26:21 AM PDT · by BGHater · 3 replies · 402+ views
    CFO ^ | 24 July 2009 | David M. Katz
    First-quarter financials mark the first time comprehensive derivatives disclosure was mandated for all U.S. companies. Members of Congress probing threats to the global financial system — especially the threat of concentration of risk — will have a lot to ponder in newly mandated disclosures highlighted by a Fitch Ratings report issued last week. While derivatives use among U.S. companies is widespread, an "overwhelming majority of the exposure is concentrated among financial institutions," according to the rating agency's review of first-quarter financials. Concentrated, in fact, among a mere handful of financial-services giants. About 80% of the derivative assets and liabilities carried...
  • DoJ demands CDS trading data from dealers

    07/14/2009 4:51:41 PM PDT · by FromLori · 13 replies · 471+ views
    The US Department of Justice has started investigating a data provider and dealers in the credit derivatives market for potential violations of the US Sherman Act, which prohibits abuses of monopoly power or other forms of collusion. Demands were sent to more than a dozen dealers for several years’ of detailed information about trading and pricing, according to people who received the letter. The DoJ letter was sent to banks with an equity stake in Markit Group, which provides pricing data on markets including the credit default swaps (CDS). The move comes as the regulatory spotlight shines on the CDS...
  • Geithner says derivatives blindsided the gov't

    07/10/2009 10:11:59 AM PDT · by NormsRevenge · 65 replies · 1,895+ views
    AP on Yahoo ^ | 7/10/09 | Anne Flaherty - ap
    WASHINGTON – The huge amount of money tied up in complex derivative transactions helped cripple the economy, Treasury Secretary Timothy Geithner told lawmakers Friday as he laid out a case for greater government control over a generally unregulated sector of the financial markets. "Establishing a comprehensive framework of oversight is crucial," Geithner said .. Despite apprehension among Republicans, the effort to add government restrictions to these more freewheeling financial instruments has gained support within the Democratic-controlled Congress. "Clearly, we're going to be significantly expanding regulation of derivatives," said Rep. Barney Frank, ..
  • Derivatives the Greatest Scam in the History of the World

    07/06/2009 8:56:17 AM PDT · by FromLori · 43 replies · 1,365+ views
    Chris Clancy writes: This essay is a story about insurance, or rather, a story about a type of insurance policy which underwent a mutation. This mutation was not spontaneous – it was engineered. It was one of the biggest scams ever perpetrated. Paradoxically, the problem was that it worked too well and just got too big. I hope you stay with the story until its denouement. Maybe you’ll be gobsmacked. If it moves you to go out and start looking for suitable lamposts – then it’s understandable. When a business makes a loan to another party it can insure against...
  • Derivatives Tug of War Takes Shape

    06/27/2009 9:49:44 AM PDT · by FromLori · 13 replies · 428+ views
    NYT ^ | 6/26/09
    In the world of derivatives, profits for the dealers come from complexity and secrecy. As a new regulatory system for derivatives is shaped on Capitol Hill, the banks will try to preserve as much of both as they can. To the extent they succeed, it will be the customers, and the financial system, that are at risk. Already the banks seem to be winning one important battle, that of explaining why derivatives exist. In Congressional testimony this week, Mary Schapiro, the chairman of the Securities and Exchange Commission, and Gary Gensler, the chairman of the Commodity Futures Trading Commission, laid...
  • A Decade of Warnings as Congress and the Fed Fiddled [actually back to 1980]

    05/25/2009 10:40:21 PM PDT · by Lorianne · 12 replies · 753+ views
    The Cutting Edge ^ | May 25th 2009 | Kat Aaron
    A little more than a decade ago, William Brennan foresaw the financial collapse of 2008. As director of the Home Defense Program at the Atlanta Legal Aid Society, he watched as subprime lenders earned enormous profits making mortgages to people who clearly couldn’t afford them. The loans were bad for borrowers — Brennan knew that. He also knew the loans were bad for the Wall Street investors buying up these shaky mortgages by the thousands. And he spoke up about his fears. “I think this house of cards may tumble some day, and it will mean great losses for the...
  • Kabuki on the Potomac: Reforming Credit Default Swaps and OTC Derivatives

    05/18/2009 8:39:17 PM PDT · by TigerLikesRooster · 4 replies · 275+ views
    Kabuki on the Potomac: Reforming Credit Default Swaps and OTC Derivatives May 18, 2009 /snip We gratefully acknowledge contributions for today's comment from members of the Herbert Gold Society, an informal group of current and former employees of the U.S. Treasury and the Federal Reserve System. Despite bringing the world economy to its knees and costing taxpayers hundreds of billions of dollars in bailouts for events such as Bear Stearns, Lehman Brothers and American International Group (NYSE:AIG), the Masters of the Universe who run the largest Wall Street firms of have learned not a thing when it comes to credit...
  • Crackdown Worries Energy Markets

    05/17/2009 9:47:32 PM PDT · by reaganaut1 · 3 replies · 445+ views
    Wall Street Journal ^ | May 18, 2009 | Brian Baskin and Gregory Meyer
    Energy markets are getting swept up in the Obama administration's drive to crack down on off-exchange trading of exotic financial instruments blamed for sparking last year's crisis. The Treasury Department, along with other regulators, wants many common over-the-counter, or OTC, derivatives to trade through a central counterparty so that a failed trade can't have a domino effect on the market. The regulators are targeting what was a $684 trillion market in June 2008, according to the Bank for International Settlements. Commodities make up just 2% of that total, but participants in oil, gas and power markets say it could become...
  • Caution: Flip-Flop Alarm Is Ringing (Actual Good News At Last, Maybe)

    05/13/2009 2:57:57 PM PDT · by Grim · 1 replies · 361+ views
    The Market Ticker ^ | 5/13/09 | Carl Denninger
    <p>May 13 (Bloomberg) -- The U.S. Treasury will tell banks to increase transparency in the over-the-counter derivatives market by making prices available on centralized computer platforms, according to people familiar with the plan.</p> <p>Treasury Secretary Timothy Geithner may announce the decision as soon as today, said the people, who declined to be identified because they weren’t authorized to speak publicly. Geithner laid out a framework in March for increasing regulation of financial markets as the worst credit crisis since the Great Depression caused more than $1.4 trillion in writedowns by banks and financial companies worldwide.</p>
  • J.P. Morgan's weapons of mass destruction ( How brokerage created derivatives)

    05/11/2009 11:47:43 AM PDT · by Ernest_at_the_Beach · 3 replies · 483+ views
    Marketwatch ^ | May 11, 2009 10:13 a.m. EDT | David Marsh,
    MARSH ON MONDAY J.P. Morgan's weapons of mass destruction Commentary: How brokerage created derivatives that brought down markets LONDON (MarketWatch) -- "We know everything about Saddam Hussein's arsenal," George W. Bush is supposed to have said -- probably apocryphally -- about Iraq's weaponry, shortly before the American and British invasion in March 2003. "After all, we supplied them." There may be certain similarities with the gradual uncovering of the real reasons behind the financial and economic crisis. The banks that have best coped with the toxic asset challenges are those who actually invented these instruments. By passing on these seemingly...
  • Financial Devivitives: Actions Needed to Protect the Financial System

    05/11/2009 6:04:47 AM PDT · by tired&retired · 2 replies · 227+ views
    GAO Archives ^ | May 1994 | United States General Accounting Office
    The linked report from the General Accounting Office in May 1994 outlines the actions needed to protect the US financial system from the risks of derivatives. It's a long report in pdf format, but well worth the reading. It shows that the GAO warned the Clinton Administration, the Secretary of the Treasury, Securities and Exchange Commission, Chairman of the Federal Reserve Board, Comptroller of Currency, and Chairman of the FDIC of the dangers of derivatives. There is a chart on page 54 that shows most of the now troubled financial institutions exposure to derivative credit risk as a percentage of...
  • Poor Bets in Oil & Derivatives, Rethinking the Buffett Game (BRK-A, BRK-B, COP, WFC, DOW)

    05/10/2009 9:23:42 AM PDT · by FromLori · 7 replies · 439+ views
    Berkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B) may have had the wind behind its back from its annual shareholder meeting, but that wind now may breaking wind. This was Warren Buffett’s first loss for a quarter since 2001. On a net loss basis, Berkshire Hathaway lost roughly $1.5 billion. While some charges and operations were lower, it was the big oil investment in ConocoPhillips (NYSE: COP) which Buffett went on and on about. The huge gains seen inWells Fargo & Co. (NYSE: WFC) and other financial stocks were hardly a footnote throughout the earnings. The company’s operating earnings were down...
  • Derivatives explained

    05/10/2009 9:31:24 AM PDT · by safetysign · 74 replies · 2,450+ views
    vanity
    Heidi is the proprietor of a bar in Hungry Horse. In order to increase sales, she decides to allow her loyal customers - most of whom are unemployed alcoholics - to drink now but pay later. She keeps track of the drinks consumed on a ledger (thereby granting the customers loans). Word gets around about Heidi's drink now pay later marketing strategy and as a result, increasing numbers of customers flood into Heidi's bar and soon she has the largest sale volume for any bar in Montana . By providing her customers' freedom from immediate payment demands, Heidi gets no...
  • Buffett's Berkshire squeezed by losses (losses in derivatives)

    05/08/2009 5:28:36 PM PDT · by dennisw · 10 replies · 570+ views
    cnn. ^ | May 8, 2009: 6:37 PM ET | By David Goldman
    Derivatives plague Berkshire. Buffett said at the shareholders' meeting last week that losses from defaults and bad bets on derivatives would cut into the company's profit and revenue. Berkshire's insurance business, like many other insurers, has written some contracts on derivatives, promising to pay its trading partners in the event of default on the underlying assets. Defaults had been rising sharply ever since the housing market and economy took a beating. The company's derivative-related losses totaled $986 million in the quarter, down 7.6% from the $1.1 billion of derivative losses the company suffered in the year-earlier quarter. The recession has...
  • Harvard: the Inside Story of Its Finance Meltdown

    04/13/2009 2:15:05 PM PDT · by RonF · 20 replies · 1,232+ views
    Forbes Magazine ^ | 3/16/2009 | Bernard Condon, Nathan Vardi
    The superstars at Harvard defied markets for years-- until now. Here's the inside story of how they finally tripped up.Stocks were tumbling last fall as the new school year began, but at Harvard University it was as if the boom had never ended. Workers were digging across the river from Harvard's Cambridge, Mass. home, the start of a grand expansion that was to eventually almost double the size of the university. Budgets were plump, and students from middle-class families were getting big tuition breaks under an ambitious new financial aid program. The lavish spending was made possible by the earnings...
  • Economic Collapse for Dummies

    04/06/2009 12:51:47 PM PDT · by emanresUyM · 6 replies · 527+ views
    The Melting Pot Project ^ | 4/6/09 | Jill Twiss
    You see, I decided that it's not okay for me to be angry with A.I.G. for giving bonuses to derivatives traders without knowing what derivatives traders do. It doesn't make sense for me to be pissed at banks who made ridiculous housing loans till I understand why they did it, which means understanding mortgage-backed securities. And I'm not allowed to ridicule Congress for passing legislation allowing credit default swaps until I figure out what credit default swaps are.
  • Mr. Taleb Goes to Washington

    03/27/2009 6:52:20 AM PDT · by hripka · 432+ views
    Thebigmoney.com ^ | March 26, 2009 | Marion Maneker
    Nassim Taleb is an unlikely choice to play the Jimmy Stewart role in a 21st-century remake of the Depression-era classic Mr. Smith Goes to Washington [1]. But the tale of a naive do-gooder who tries to remind a corrupt political class of its obligations was re-enacted this week when Taleb attended the Wall Street Journal's Future of Finance conference in Washington, D.C. A French- and Arabic-speaking former options trader with a taste for obscure Greek philosophers and the ambition to be seen as a literary figure, Taleb has grown famous for his book The Black Swan [2], which has sold...
  • The Reckoning Taking Hard New Look at a Greenspan Legacy [Derivatives]

    03/24/2009 9:00:17 AM PDT · by syriacus · 7 replies · 343+ views
    The New York Times ^ | October 9, 2008 | PETER S. GOODMAN
    Mr. Greenspan’s legacy may ultimately rest on a more deeply embedded and much less scrutinized phenomenon: the spectacular boom and calamitous bust in derivatives trading.[snip] “Proposals to bring even minimalist regulation were basically rebuffed by Greenspan and various people in the Treasury,” recalled Alan S. Blinder, a former Federal Reserve board member and an economist at Princeton University. “I think of him as consistently cheerleading on derivatives.”[snip] Robert E. Rubin, the Treasury secretary then. Treasury lawyers concluded that merely discussing new rules threatened the derivatives market [snip] In early 1998, Mr. Rubin’s deputy, Lawrence H. Summers, called Ms. Born* and...
  • Derivative Bubble?

    03/17/2009 3:06:43 PM PDT · by Kartographer · 8 replies · 636+ views
    As I try to make sense of the chaotic state of the country's as well as the world's economy I keep running across various articles that contain doom and gloom over derivatives and the fact that there are some unimaginable economic losses looming tied to them. So as a financial illiterate I am asking is there a 'bubble brust' on the horizon for derivatives and if so how bad would it be?
  • What Is Really Killing the Big Banks? (Learn about credit default swaps)

    03/03/2009 3:38:54 PM PST · by dennisw · 27 replies · 1,297+ views
    By Christopher Whalen ^ | Friday, February 13, 2009 | By Christopher Whalen
    What Is Really Killing the Big Banks?   By Christopher Whalen | Friday, February 13, 2009   As the Obama Administration performs triage on the housing and credit markets, one of the most damaging aspects of the financial crisis has been largely overlooked. Christopher Whalen, hailed by Nouriel Roubini as one of the leading independent analysts of the U.S. banking system, explains the problem of credit default swaps.One of the least understood aspects of the financial crisis — but potentially the most damaging — is the market for over-the-counter derivatives and particularly one type of derivative known as a...
  • What Cooked the World's Economy? It wasn't your overdue mortgage.

    02/02/2009 12:41:18 AM PST · by Tempest · 337 replies · 8,186+ views
    The Village Voice ^ | James Lieber
    The basic story line so far is that we are all to blame, including homeowners who bit off more than they could chew, lenders who wrote absurd adjustable-rate mortgages, and greedy investment bankers. Credit derivatives also figure heavily in the plot. Apologists say that these became so complicated that even Wall Street couldn't understand them and that they created "an unacceptable level of risk." Then these blowhards tell us that the bailout will pump hundreds of billions of dollars into the credit arteries and save the patient, which is the world's financial system. It will take time—maybe a year or...
  • Would You Pay $103,000 for This Arizona Fixer-Upper?

    01/03/2009 9:21:57 AM PST · by Para-Ord.45 · 89 replies · 4,136+ views
    http://online.wsj.com ^ | JANUARY 3, 2009, | MICHAEL M. PHILLIPS
    he story of the two-bedroom, one-bath shack on West Hopi Street, is the story of this year's financial panic, told in 576 square feet. It helps explain how a series of bad decisions can add up to the worst financial crisis since the Great Depression. Less than two years ago, Integrity Funding LLC, a local lender, gave a $103,000 mortgage to the owner, Marvene Halterman, an unemployed woman with a long list of creditors and, by her own account, a long history of drug and alcohol abuse. For a $350 fee, an appraiser hired by Integrity, Michael T. Asher, valued...
  • Meltdown: The toxic effects of Derivatives (another class of derivative due to implode?)

    11/17/2008 6:29:35 AM PST · by TigerLikesRooster · 38 replies · 1,338+ views
    Commodity Online ^ | 11/16/08 | Monty Guild and Tony Danaher
    Meltdown: The toxic effects of Derivatives By Monty Guild and Tony Danaher A few weeks ago many thought I was out of my mind. I had the temerity to state that I thought that we were going into a depression, not a recession, and that the economic decline would last for two to three years. Now, it looks like a few others are coming around to my view. The chairman of Goldman Sachs recently said we are facing a banking crisis worse than the Great Depression. The former chairman of the New York Stock Exchange said it is comparable to...
  • The 4 Horsemen have Arrived(Debts, Derivatives, Deficits, and Dollar)

    10/31/2008 1:12:09 AM PDT · by TigerLikesRooster · 10 replies · 426+ views
    Cornerstone ^ | Oct., 2008 | John Riley
  • Gobbled up by the derivatives monster

    10/21/2008 4:38:12 PM PDT · by Lorianne · 8 replies · 596+ views
    Asia Times ^ | Oct 21, 2008 | Richard Daughty
    Clive Maund at clivemaund.com says, "Payback time for Wall St and Washington will be when foreign investors fail to turn up at the bond auctions to finance the bailout plan, whose US$800+ billion will have to be created out of thin air. So the bonds will have to be monetized, which will mean an immediate spike in inflation, which will cause the rate of corporate bankruptcies to soar as failing companies take down others in a chain reaction because the losses will be highly leveraged by credit default swaps etc. This is the underlying reason why banks won't lend to...
  • OMG: The derivatives bubble = $190K per person on planet

    10/21/2008 4:42:52 PM PDT · by Lorianne · 16 replies · 829+ views
    Tom Foremski blog ^ | October 16th, 2008 | Tom Foremski
    This single statistic has boggled my mind because it puts into perspective the enormous size of the derivatives bubble. DK Matai, chairman of the ACTA Open in his article The Invisible One Quadrillion Dollar Equation — Asymmetric Leverage and Systemic Risk writes: According to various distinguished sources including the Bank for International Settlements (BIS) in Basel, Switzerland — the central bankers’ bank — the amount of outstanding derivatives worldwide as of December 2007 crossed USD 1.144 Quadrillion, ie, USD 1,144 Trillion. The population of the whole planet is about 6 billion people. So the derivatives market alone represents about USD...
  • SEC head calls for transparency on credit default swap

    10/18/2008 9:13:28 PM PDT · by NormsRevenge · 27 replies · 458+ views
    Reuters on Yahoo ^ | 10/18/08 | Chris Michaud
    NEW YORK (Reuters) – SEC Chairman Christopher Cox has called on Congress to pass legislation that would make so-called credit default swaps more transparent, including requiring that dealers in over-the-counter swaps publicly report their trades and the trades' value. Writing in Sunday's New York Times, Cox noted that the $55 trillion credit defaults market is more than the GNP of all the world's nations combined, and that credit default swaps "play an important role in the smooth functioning of capital markets." But, he said, "our markets function best when they are highly transparent," while credit default swaps have "operated in...
  • EU Calls For Clear Plan on Valuing Derivitives

    EU calls for clear plan on valuing derivatives The Associated PressPublished: October 17, 2008 E-Mail Article Listen to Article Printer-Friendly 3-Column Format Translate Share Article Text Size BRUSSELS, Belgium: European Union regulators called Friday for a clear plan on valuing some of the shadowy high-risk credit derivative investments — estimated at around US$600 trillion (€444 trillion) — that are now a key issue in easing the global financial crisis. Billions of euros (dollars) have been wiped off banks' balance sheets in recent months on fears that some complex investments may be based on assets that are nearly worthless — such...