The markets are very spooky these days
http://www.coasttocoastam.com/gen/page2914.html?theme=light
Posted on 01/24/2009 5:44:03 PM PST by dennisw
Blame Wall St crooks
Blame credit default swaps
Feds are idiots but get only 30% of the blame in my book
This video will help you understand how credit default swaps have put us in this jam along with the bundled mortgages that Wall St also invented and also made billions on
More over here including transcript
http://www.cbsnews.com/stories/2008/10/05/60minutes/main4502454.shtml#ccmm
Looks like someone had the video pulled.
Correct video link!! ----->>>>
I saw this when it was aired in october.
I work for an insurance company that got into the MBS market in late 2005 and early 2006. Because the software we used at the time couldn’t handle these securities, we contracted for the accounting to be done by the investment manager.
There is involvement from so many directions: software, investments, accounting. WHOLE companies were created to handle this stuff. I never gave it thought when part of my job was handled elsewhere - but now I can see how the tentacles of this have invaded everywhere!
It is SHAMEFUL that Congress allowed this to happen. “Let’s call it something it isn’t and we won’t have to regulate it!”
Thanks.
yeah, 60 minutes dumbs you down.
I have a lot of respect for James Grant. He's no novice to the camera. I wonder if he's happy with the entire piece. In any event, judging by your post, I'd say it had its intended effect.
***
CDS are a fascinating market, and they deserve an impartial study, not a soap-opera.
Finally, the problem with the instruments were no more or less than the problem with any other investments. The cause of "the mess we're in" was that investments in these instruments were leveraged wildly; and that the underlying assets were also leveraged wildly. Bad investments happen. When they're leveraged, they're catastrophic. This has as much to do with Glass-Steagal as it does with CDS. While there is much to ponder about CDS, this piece doesn't even come close to an intelligent inquiry.
I was going to click on it until I read that it was from 60 Minutes. They were the pioneers of deceptive television journalism.
We’ve heard so often that the swaps we a zero sum game. I guess when the economy was doing well there we some winners and losers but it was mostly true. When the real estate bubble started to break it became real clear real fast that the CDS market ,instead of insulating a firm ,essentially interconnected to each others losses. Instead of the system acting like a cable with multiple strands it was more like a chain where one bad link could cause total failure.
Enough leverage can turn a loss on a single trade into multiple bankruptcies.
Newt and the boys screw** the pooch on this one. They need to man up and step foreward and say how they are going to help fix it.
That's my reaction. If 60 Minutes only lies some times - it's still impossible to trust them at any given time. Maybe some group more trustworthy will explain the situation...
I have a cursory understanding of CDS’s, and it seems to me that liberals tend to blame these as the reason we’re currently in the economic crisis we’re in.
I kind of view CDS’s as a nuclear reactor. Absolutely, nuclear reactors need some regulation and oversight, so I agree on the liberals on that point. However, what I disagree with is that they are the cause of our current problem.
You cannot blame a nuclear reactor for a massive explosion if a couple of guys, say hypothetically named Dodd and Frank, carried 15 sticks of dynamite and stuffed it under the reactor and blew it up.
I think I would place the blame the two guys no matter how imperfect the reactor was in the first place.
Bump for later
Liberals always view government as the solution so naturally they will blame Wall St for the current economic mess
But in this case they are mostly right
The Feds helped make this mess and I blame them and Democrats about 30-40%
60-70% of the blame falls on Wall St
Wall St is not exactly full of capitalists.
Wall St is full of money grubbing money manipulators and asset shufflers and there is a difference
James Grant is a genius and has been a dour hard money guy for decades.
He has been skeptical of the way Wall St does things for decades and same for our economic system
He is finally right and so am I in that same way as Grant ever since I read his book "Money of the Mind" circa 1994. James Grant has been a muckraker and gadfly of the highest order and irritating the economic powers that be for years longer than newbies like Nouriel Roubini, Mish and Peter Schiff.
I'm shocked how right I am but I will admit it took 15 years longer than I thought it would
Money of the Mind: Borrowing and Lending in America from the Civil ... - Google Books Result
by James Grant - 1994 - Business & Economics - 544 pages
The result is required--and wickedly entertaining--reading for everyone who wants or needs to understand how the world really works.
books.google.com/books?isbn=0374524017...
CDS were used to insure the bundled mortgages which are more accurately known as collateralized mortgage obligations (CDOs)
These CDS were based on the assumption that asset prices (real estate) would keep rising
This assumption was always a convenient fiction, a convenient lie actually, but it helped make Wall St hot shots billions in bonuses
Would you lie to yourself and others if it meant you made 5 or 10 million a year? If those others you lied to were Wall St asset shufflers just like you? I would be tempted
they got it right this time. the only question they did not cover, is whe forced the banks/mortagage companies into making risky loans....frank....dodd...
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