Posted on 03/04/2009 8:45:37 PM PST by GoreNoMore
The third and most devastating leg of the great American meltdown of 2009 is the derivatives leg which reveals trillions of dollars of unsecured debt and credit default swaps which cannot be covered and has ushered in the PANIC phase of our economic collapse: Allen L Roland
The first leg in the great bear market of 2008/09 was the sub prime mortgage debacle which led to the current credit card crisis leg, which is still adding tremendous pressure to mainstream banks, but the final leg is the derivative leg which represents trillions of dollars of unregulated credit default swaps and unsecured debt which can not possibly be covered. It is truly the 900 pound gorilla in the room that no one wants to acknowledge but everyone, including Washington, is petrified of. See The unspoken cause of the Stock Market collapse is derivative trading ! http://blogs.salon.com/0002255/2008/10/13.html
(Excerpt) Read more at fourwinds10.com ...
AIG's reported loss of 62 billion dollars yesterday, the biggest quarterly loss in Corporate history, after an infusion of a $60 billion dollar bailout loan, a $40 billion purchase of preferred shares, $40 billion to soak up its toxic assets and another $30 billion on top of that ~ is all related to derivative contracts. AIG has used derivative contracts to guarantee complex debt securities on the books of many shaky financial institutions. If AIG defaults on its debt ~ which is now a staggering $180 billion ( equivalent to nearly half the U.S. government’s entire budget deficit for all of 2008 ) the whole financial system would crumble so the Fed agrees to another $30 Billion bailout and delays the inevitable shake out.
Hahaha
Can you explain who won 62 billion dollars yesterday if AIG lost it?
Washington is not afraid of this. Obama can’t wait for an entire economic collapse so he can remake America in his Marxist image.
Hmmm. It may explain the convoy of Brinks trucks in my driveway.
If you thought your house was worth $500,000 in 2007, but you sold it for $350,000 in 2008, no one ran off with the $150,000, it just disappeared. Same thing with AIG; Poof its gone.
Derivatives are economically neutral. They are zero sum. They can neither boost nor crash an economy.
They simply move money between winners and losers. Same money. No net gain to the wider economy. No net loss.
Nobody touches my third leg, unless I pay $10.
I suspect the the credit card phase of all this is just getting started, and mortages are entering their 2nd phase.
Defaults are spreading as jobs disappear in the Obamcomony.
True for the homes, but not true for AIG. AIG gets annual income for insuring loans. If a loan defaults, then AIG moves money from AIG to a lender (or to a speculator).
If more loans default than AIG recieves income in annual premiums during a given year, then AIG loses money.
That money goes to the person/entity who was paying annual premiums to AIG.
But that money doesn't just "disappear." Someone else gets it.
lol They won't be the only convoy pulling into your driveway.... the tax man will be there before dawn.
Revealed: the geniuses heading up the world’s largest financial companies were a bunch of irresponsible, greedy scum who didn’t care that they were very possibly going to wreck the world economic system, so long as they got their bonuses.
I say, put them in pillories in full public display where those who lost their savings are free to beat them and humiliate them as they see fit.
Some Russians are not afraid of this either. Check out this link by a Russian academic who predicts the US will break up into 6 parts by 2011, and Russia and China will be the new power currency.
http://www.foxnews.com/story/0,2933,504384,00.html
My city has just lowered the tax rate for 2010 on two houses I own by about 8%. On the other hand my poor significant other has lost 1/2 the value of his market holdings. Still, on average, I don’t think we are any worse off relative to the rest of the population.
You are describing an imaginary value and unless I have something staked upon my house having said $500,000 value how can I loose $150,000 with a literal sale of $350,000 a year later? What is to bail out if it is of imagined value? Or has AIG spent or promised that supposed imagined value?
Can I live in the Sarah Palin part?
No you can’t, because the article says that Russia will reclaim Alaska. Or I guess I should say you wouldn’t want to, and boy will they have some fun trying to run that gal.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.