Posted on 03/04/2009 8:45:37 PM PST by GoreNoMore
I feel for the soldiers, they thought they were saving this country, but look what has happen while they were gone.
A sad coming home day, ashamed we all should be for allowing this to happen. We put those congress men in office and have done NOTHUNG to re-call their ineptness.
$10? dude... stop shopping in the liberal areas, you’re more likely to get defective goods
:)
Rubber-five here, whats our status?
Rubber-5, there's a breach in your 5th rubber
Huh? hold on,
OMG, I've breached the threashhold and I'm in serial trubble!
Rubber-5, relax, pull back on your position and you should be Ok
Ack-knowledged, pulling out now!
Think of the crooked land deals in the S&L days -- two conspirators buy a parcel of worthless swampland.
They sell it back and forth jacking up the price, then use it as collateral for a loan.
They default on the loan, and the bank is stuck with the (inherently, but fraudulently valued) swampland.
Now add to the scenario, that instead of a loan, the conspirators were promised, by the bank, an income stream from a set of other properties.
Guess what the income stream was?
The income from mortgage payments from yokels who bought McMansions on the swampland, which *they* couldn't afford.
*Everyone* has been trading fictitious paper wealth and using it to buy -- on credit -- luxury goods and services.
Now people are all realizing that the wealth was fictitious: but those who produced the luxury goods want *real payment* for their products.
And it just isn't there.
And the banks, having had their vaults filled with the toxic IOU's, won't lend nearly as easily as before to businesses or consumers. And certainly not to each other.
It's like musical chairs, except instead of one chair being removed, only one chair remains.
Guess what happens then?
Cheers!
Cheers!
ping
Credit Default Swaps are a scam so big and so insane that even PT Barnum would have run away from them.
Interesting part of the link.
The Board of Governors contends that it’s separate from its member banks, including the Federal Reserve Bank of New York which runs the lending programs. Most documents relevant to the Bloomberg suit are at the Federal Reserve Bank of New York, which the Fed contends isn’t subject to FOIA law. The Board of Governors has 231 pages of documents, which it is denying access to under an exemption under trade secrets
No, it's always true.
Derivatives can only move money between two parties. That's at most. Most times, no money will even move.
But no money is created or destroyed by derivatives.
Derivatives are economically neutral.
Derivatives are zero sum.
People who claim that financially neutral tools can destroy an economy do not understand basic economics.
Moving money, or not, between any two individuals creates no new wealth in the broader economy...and destroys no existing wealth, overall.
Thus, derivatives can neither boom nor bust an economy.
They are neutral.
IF party A is counting on party B to reimburse them for losses, and party B says, "I don't have the money to do this" I would think party A is up the creek.
Cheers!
Yup, but the economy in aggregate doesn’t care if you have money (Party A) or if I have that money (Party B).
Moving the same money from Party A to Party B creates no new wealth, and destroys no old wealth.
Such a move is financially neutral to the economy. Oh sure, Party A and B care, but not the whole economy.
That’s derivatives. The economy doesn’t care about economically neutral actions.
This, I think, is the problem -- the insurers of the CDS instruments (for example AIG) were levered at, oh, say, 50-1.
Which means that with a 3% fall in price of the things they were 'insuring' -- they get wiped out.
Which means the people who were counting on them to insure them--have to eat the losses.
Which they weren't counting on.
Which means they have to liquidate *other* assets to make up the shortfall.
Which drives down the price of the other assets.
Which affects the capitalization ratios of other players.
Which means the new players are subject to margin calls.
Which means *they* have to liquidate.
Apply, lather, crash.
Cheers!
The economy doesn’t care. Just because it impacts you doesn’t always mean that something impacts everyone else.
Whether I owe you money and can pay, or can’t pay, makes zero difference to the broader economy.
You just think that it *should*, but the total banking system will see the same level of deposits whether you have the money or me...be it nothing...no deposits...or something...some deposits.
I can owe you money. You can owe me money. Doesn’t matter to the broader economy. Same level of deposits in the bank either way, just from the accounts of different people.
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