Posted on 09/25/2008 7:42:45 PM PDT by what's up
NEW YORK, Sept 25 (Reuters) - U.S. regulators are looking into credit derivatives as they investigate market manipulation, and some lawyers believe the government is looking at whether traders have used the products to help push banks closer to insolvency
(Excerpt) Read more at reuters.com ...
GMTA!
I am not going to be satisfied until somebody responsible goes to jail.
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It's like all of AlQaida's little friends decided to "get mortgages".
I do think this is a serious possibility.
I also think we may just be seeing the beginning of this.
I think the $700 billion we give each year to foreign oil states may have been cleverly diverted to financial terrorism far more productive than crashing planes into skyscrapers. Sadly, interntational enforcement agencies would like to see our economy get tanked before the election so they can have their man in Washington.
bump
Financial terrorism bump.
The vicious attacks toward several companies on Wall Street last week have to be considered as unusual.
A handful of strong companies' stocks were being driven down rapidly by shorting activity. This is not only profitable for short traders; the drop in price also decreases a company's credit worthiness and can cause them to plunge more deeply into debt, possibly leading to bankruptcy. The possibility that the attacks were intended to deliberately bankrupt the companies has to be considered.
This may very well be what happened to Lehman Brothers and what drove them out of business.
If anyone wanted to destroy our financial institutions, this would be a good way.
I wonder what this wide-ranging investigation is going to turn up.
The man runs the SEC and he just figured that out?
The only thing that is not mentioned is that it is a highly leveraged way of short selling the bond underlying the swap, and thereby sinking the institution relying upon the market value of the bond. Now, if you naked shorted the institution you are attacking with swaps on its bondholdings you could really make a bundle.
Swaps are legal, how come?
> Financial Terror? Soros?
Duh. It seems to me it is the height of regulatory foolishness to have allowed fiscal instruments (e.g., the credit default swaps) in which 3rd parties can make highly leveraged profits by wreaking havoc on our economic system.
In engineering, we call it a marginally stable system. Just a slight push out of equilibrium, and the whole thing comes unglued.
I am confident that our enemies are exploiting derivatives to this end.
First, this is probably done by hedge funds in NY [or the Cayman Islands]. I am guessing that Soros is not involved because it is not his style, actually. His investment style is to let things get way out of wack because a lot of people have stampeded in a heard mentality and gone way too far, and then try to time the market turn and bet on the correction. I know Soros is despised around here, and I don’t like his politics, but there has been a method to his investment madness.
It is like trying to bring in 50 stars of 10 solar masses strategically placed outside the solar system to stabilize the asteroid belt and prevent certain doom scenarios. Far from bringing stability, you will wake up one day and find the earth on an orbit headed out to Pluto and beyond. Highly nonlinear systems with large forcing function always go haywire. The question is not if, but how soon, and why hasn't it happened yet. The question is not by what accident the train went off the track, but by what miracle with all the springs and bounces and jostling and starting and stopping it manages to stay on the track.
It is leverage that lead to the 1929 crash.
> It is leverage that lead to the 1929 crash.
I recall reading that in Galbraith’s book.
It's like a highly leveraged put on the bond.
and thereby sinking the institution relying upon the market value of the bond.
How does the purchase of a swap sink the institution or the bond of that institution? Remember, for every swap you buy, someone else had to sell one.
I heard London or Dubai but there's lots of wild rumors raging.
Eventually, they will blame Free Republic.
No such thread for your link.
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