"It not like gambling. If any banker loses
but has paid us off fully in kickbacks, then
the sucker taxpayers bail the banker's losses out!"
Posted on 12/13/2009 4:47:03 AM PST by dennisw
"Developed countries, especially the U.S. and western Europe, produced an enormous amount of paper that represents assets that are unaccounted for," he says. The Bank for International Settlements put total notional value of outstanding derivatives at $591 trillion at end of 2008.
"The amount of paper you have in America and western Europe that is unanchored to anything you can put your hands on is enormous," "Why should you be listening to me, a Latin American? Because we know something about flooding a market with paper." He's alluding to such crises as Argentina's repeated bouts with inflation or the loose lending that precipitated Mexico's 1994 financial crisis
U.S. banks went beyond simply lending to unworthy creditors. The increase in the number and kind of derivative contracts--including some, like credit default swaps, that were traded over the counter rather than on exchanges--created a new kind of shadow economy, De Soto argues.
In letting the derivatives market grow to the size it did with little tracking or transparency, De Soto says, Americans breached a law so fundamental that it is unwritten. In the West, ever since feudalism collapsed, "the market made an effort to record everything so that paper meant something," he notes. This happened without the mandate of any central government. "If I asked you, where is the ministry of property in the U.S.? You'd say we have no ministry of property. Sometimes you don't need it."Yet title to every house, car, mortgage, bank account and patent had always been reliably documented. "It's not a fundamental law written into your constitution but an unwritten law that you have not respected, which is that paper means something," he says.
This notion that the legal invisibility of part of the derivatives market played a role in the crisis now has wide acceptance.
(Excerpt) Read more at forbes.com ...
"It not like gambling. If any banker loses
but has paid us off fully in kickbacks, then
the sucker taxpayers bail the banker's losses out!"
READ THE WHOLE ARTICLE-—
Derivatives and credit default swaps are anti-capitalist and against American traditions that made us great. We always account for our financial paper except with derivatives and swaps. There is transparency except with derivatives which are traded in the shadows by our shadow banking system which is mostly Wall Street pond scum such as Goldman Sachs. Yes there are other participants such as foreign banks and US banks. Hedge funds too I guess
Sure futures are simple derivatives but are traded on public exchanges
You have a title to your house and automobile. Both titles fully define what you own and are documents kept in gubbermint offices. This is why you get title insurance on a house
Barney Frank is the eternal clown and court jester. He should have gone to Hollyweird instead
Bookmarked.
Ping!
How on earth could anyone believe that the global banking system could assist poor squatters in the 3rd world (sad really). Why the continual complexity story of the “credit crisis?” Blatantly fraudulent mortgages, CDO’s and MBO’s based on the same, fraudulently rated CDO’s and MBO’s,AIG operating outside normal insurance regulation insuring all the fraud. The losses have to be realized.
Or maybe we could just borrow more money and rain it over the Amazon, yeah, there’s a thought. WAKE THE F** UP AMERICA, YOU’VE BEEN FLEECED AND YOU AND YOUR KIDS ARE GOING TO BE ASKED TO PAY FOR IT!
(there, I got that off my chest)
The supremacy of finance capital over all other forms of capital means the predominance of the rentier and of the financial oligarchy; it means that a small number of financially “powerful” states stand out among all the rest. The extent to which this process is going on may be judged from the statistics on emissions, i.e., the issue of all kinds of securities. - Vladimir Ilyich Lenin
Derivatives and credit default swaps are anti-capitalist and against American traditions that made us great. - dennisw
Absolutely. Anti-truth finance criminals are running roughshod over the republic.
Here is a great video of Hernando.....I am definitly a fan of his common sense. Fat guy with a beard from Peru? What does he know? What can he teach the hot shots in America? It turns out he is wiser than most. I advise you to jump to the clips he is on. The other too have nothing unique to say. This Forbes article clarified the video for me
Marked for tonight.
Great quote from Lenin. Even Hitler had a few memorable quotes. So did Mao who said “Political power grows out of the barrel of a gun” You can’t become a demonic dictator without having insights into human nature and how society works
However, that danger is the simple danger of all financial contracts, not the lawlessness --- ironically, lawlessness sometimes induced by overly burdensome laws, as the author points out with the observation that it takes 728 steps to establish title in Peru --- and anarchy experienced by those mired in dire poverty.
I think that this analysis by Mr. de Soto is way off base. We must not destroy our ability to freely make financial contracts, and that's exactly what we are talking about when we talk about outlawing over the counter derivative contracts. Nor do I hold much brief for calls for "transparency": I don't think that every financial contract needs to be publicly recorded and publicly negotiated.
I don't think that this should be a country where every promise must be negotiated only under the aegis of our federal government. I have no problem with setting up new exchanges, but I have a big problem with forcing everyone to then buy and sell only on that exchange.
The title insurance is for the bankers, not the homeowner believe it or not. For the buyer to be covered he has to purchase an additional policy. My homestate prohibits title insurance, but they still make everyone buy it. The number of BS fees associated with RE is staggering.
But the gist of the article is exactly right. What’s bizarre is the title and deed to mortgages were not only separated, they were cubed and sliced and diced and sold to golly knows who. It’s interesting that something so illiquid as real estate was morphed into something so liquid that the whole market is, well, illiquid. Foreclosing on property got a lot more interesting in recent years, it won’t be pretty.
Ah, but he understands so little about our legal tradition. The law of contracts is enshrined in the common law and it is preserved in our constitution, Article II, Section 10: "No State shall ... pass any .... Law impairing the Obligation of Contracts."
It is a general principle of common law that a contract has to be for a lawful purpose. A set of contracts whose purpose or whose result is to destabilize the currency or the economy is not a lawful enterprise and the Congress is well within its powers to outlaw it. If you think the purpose of these is not to destabilize the economy then you need to go and read the checkered history of Michael Milkin who purposely created the junk bond market with the explicit understanding that the systemic risk that was created would be passed on to the public through the offices of the Federal Reserve who would face the Hobson's choice of bailing out the banks and socializing the losses or else allowing the economy to tank. In other words they held a gun to the head of the US economy and said pay up!
I’ve read his books.
A friend of mine had state archaeologist come on his land, with his permission. They undermined a retaining wall along a river bank. Not a big one, four feet high, by 20 feet long. No problem, except it’s be eight years and $15 thousand dollars later to not yet get everyone to sing off on the repairs. What does any government bureaucracy care, since none of their pay is on time value, their check come in no matter what.
Peru, Spanish Empire, Soviet Union, Post Office Anywhere USA.....all the same.
There was a early Brownshirt supporter of Hitler that said something to the effect...”that power is a gun in the street waiting for someone to pick it up.”
Cops used to not, or rarely carry guns, such was the popular support for the few, just, popular laws and justice in general. This is late 1880’s America, and England.
Now, since the Socialist centralized elite power control state, Cops ( Armed representatives of the elite ) require guns, vests....
Michael Milken with his junk bonds was like Mother Teresa compared to what Wall Street pond scum have done with derivatives, credit default swaps, and other swaps
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