Posted on 11/08/2009 4:35:23 AM PST by dennisw
I really hate these articles that carry on a discussion about an anagram (CDS) without EVER TELLING US WHAT IT MEANS.
Which brings us full circle: an attack on CDS is an attack on excess liquidity, which is an attack on the global asset/liability imbalance (as world GDP and otherwise output has no chance of catching up with the liquidity that is currently available), which is an attack on fiat money, which is an attack on the perpetually low price of gold (because if and when derivatives and securitizations are done away with and tangible assets regain their true value, gold would go up by at least the same magnitude that fiat currencies are devalued), which is an attack on the heart of our broken financial system itself, and, an attack on the Federal Reserve, the Fractional and Central Banking System in principle.
CDS jack up the money supply with fake insurance contracts, fake promises to make good on the "default insurance" being issued by the lying Wall St pond scum that issue them to each other. You insure me with CDS and I'll insure you w CDS is the game. They increase the fictional money out there
CDS = Credit Default Swaps
CDS= credit default swaps
What brought down AIG and what got Goldman Sachs 10 billion free dollars when Goldman’s whore Tim Guithner bailed them out. Goldman Sachs has more whore in the 0bama regime than just Geithner and they infiltrated GWBush’s administration too with Paulson and others
CDS is an insurance contract that one Bankster or Wall St wise guy buys from another to insure that a dicey security (bond maybe) he just bought will not default or go into semi-default. With that CDS contract in hand the bond holder will demand the CDS issuer to make him whole. To rebuild the house that burned down or the part of the house that burned down
doom and gloom ping list
CDS is an insurance contract that one Bankster or Wall St wise guy buys from another to insure that a dicey security (bond maybe) he just bought will not default or go into semi-default. With that CDS contract in hand the bond holder will demand the CDS issuer to make him whole. To rebuild the house that burned down or the part of the house that burned down.
I think CDS's should be illegal. They are what I call a "cascade" investment. Trying to take the same profit from one investment three or four times over is a total scam.
oing
That's basically it in a nutshell, absent that other small item at the end about the fiat system being essentially broken forever.
Using a treatise on capitalism and derivatives, with the headline of 26 trillion of CDS, Einhorn is doing what the left does best...revisionism. Hiding the problem in a pedantic rant. The problem was that pirate CDS speculators were first buying (on the cheap) as much naked CDS (on a corporation’s debt) as they could get their hands on, from as many counterparties who were willing to make the bet that they could find. Then the same group began their bear raid by naked shorting that same corporation’s equity, driving up the value of their naked CDS holdings. There was no hedging, the pirate speculators had no ‘skin in the game’, didn’t hold any debt of that corporation. Just a more effective way to drive a company out of business in a bear raid. By both shorting (naked, since the SEC allowed it), and holding naked CDS (not hedging positions). By not mentioning this effective (terrorist) strategy in his ‘treatise’, we can only assume that Einhorn was one of the many players. The only goal of this treatise is obfuscation (or revisionism).
You are correct in this way--->>
One of Wall St/Bankster biggest profit centers during the real estate bubble was cobbling together, selling and trading mortgage backed securities. Called CMO for collateralized mortgage obligation. These CMO were securities and if a CMO holder was worried he would take out CDS (insurance) on it. So profits were racked up and mega-bonuses doled out for the CMO business and then all over again for the CDS business to insure these CMOs
This went on all over but one specific case is Goldman Sachs holding a bunch of dubious CMOs so it went to AIG to them insured via some CDS. When AIG tubed the taxpayers were forced by pond scum Tim Geithner to make Goldman Sachs 100% whole on the CDS insurance that AIG could no longer make good on
A much fairer remedy would have been to bail out Goldman Sachs at 20 pennies to the dollar instead of 100 pennies to the dollar
Einhorn has been hip deep in derivatives and CDS and has been a big time pirate and raider
But here he is telling the truth
Of course he has profited off what he now exposes and condemns
Even now he is self serving because his biggest investment is physical AU same as John Paulson so if Einhorn can make people fearful of the CDS pyramid game then he gets more people into AU thus jacking up the AU price
During a deflationary era buyers can still inflate and run up the gold price tremendously because the gold market is tiny compared to the CDS market and other markets. And gold is ultimate refuge against implosion of CDS and derivatives and fiat currencies. So gold covers the default and implosion side. The explosion of the money supply is inflation and AU is a good hedge against that too
AU is not always capable of playing this dual role hedge versus inflation and deflation defaults but in today's circumstances it is. In my opinion
Einhorn did that with Bear Sterns and Lehman or one of them
Zero Hedge usually has good comments with some good sarcasm and dark humor
Never too late to claw back!
Good point....the Indians appear to be the biggest rubes in that current scam/bubble.
It’s a posting from a blog, not a news source, and bloggers usually aren’t very good writers (i.e., who, what, when, where, etc).
It’s the OP’s fault for not taking the extra step to clarify WTF is being discussed. I was thinking Certificates of Deposit (pluralized) at first until I read well into the article).
You are absolutely right. And the OP can take a lesson about clarity of communication.
BTW, OP = Original Poster.
WTF = What The Flock
BTW = By The Way
:-)
BTW, I was thinking Certificates of Deposit too.
FWIW = For what it's worth
LOL = Laugh out loud.
BTW = By the way.
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