Posted on 05/11/2010 12:24:25 PM PDT by buzzer
Jim Rickards, who recently has gotten massive media exposure on everything from the JPM Silver manipulation scandal, to the Greek default, was back on CNBC earlier with one of the most fascinating insights we have yet heard from anyone, which demonstrates beyond a doubt why any attempt by Europe to print its way out of its current default is doomed: "Look at what Soros did to the Bank of England in 1992 - he went after them, they had a finite amount of dollars, he was selling sterling and taking the dollars, and they were buying the sterling and selling the dollars to defend the peg. All he had to do was sell more than they had and he wins. But he needed real money to do that. Today you can break a country, you don't need money you just need synthetic euroshorts or CDS. A trillion dollar bailout: Goldman can create 10 trillion of euroshorts. So it just dominates whatever governments can do. So basically Goldman can create shorts faster than Europe can create money." Just wait until Europe finally realizes that the CDS "speculators" had all the cards in the poker game all along. And we hope Europe listens to the man: being LTCM's GC he knows all about failed bail outs.
What would be the solution ?!?
let them strangle one another and be there to pick up the pieces at a bargain price?
That’s a good explanation.
“Today you can break a country, you don’t need money you just need synthetic euroshorts or CDS.”
Soros actually had the cash. These guys today can just invent debt instruments out of thin air.
The Limbaugh people would call this counterfeiting of money “freedom.” No laws! They are eeeevil “regulations.” There is a difference! Obama and his team have ridden these idiot into the sunset.
Publicly announce that Goldman Sachs will not be bailed out. Period. Whatever risk they take will be covered by them and their customers alone. They will suddenly get much more prudent if they have to work without Uncle Sucker's net.
I've no idea at all what the above means but I am sure that "Synthetic EuroShorts" is an excellent name for a Roack Band!
We are not doomed if GS fails and goes belly up. We are only doomed if GS fails and gets bailed out. Easy solution for me.
What are you doing on FR, Shermy?
So everyone else loses their shorts.
Do you blame the weather on your thermometer?
Good 1
As for CDS, they are fancy named and hidden insurance coverage. With no financial reserve backing.
They are illegal contracts, but Paulson screwed the country, along with Greenspan and later Bernanke, via AIG crisis, that they are legal, and the USA was going to cover them.
Paulson and Bernanke actually had to come out and make a public statement that they were legal contracts. Bush was a blithering idiot to trust Paulson, and was crippled by his childish “no regulations” ideology. Obama, though, is hip to the game, and likes it.
“You worry too much about derivative products.”
Yeah, like recent history doesn’t bear out some worry!
Bingo.
Well you’ve zeroed in on the true bomb that could devastate the American economy and you are right about Limbaugh, that he is wrong on this, and that’s coming from a defender of Limbaugh for the rest of the 95% of the time that he is right.
But to appear to cheerlead Obama as being ‘hip’ ignores the danger that Obama can achieve economic destruction and pin it on Goldman, even though Goldman deserves the gallows figuratively and literally.
But again you ignore that Obama would relish the catastrophe, the guy really wants massive failure and he doesn’t care if the rest of us are thrown into abject poverty by it.
And you right about Bush as well.
Question: Bringing down Goldman can mean wiping out untold amounts of capital in the markets and that means Americans would be wiped out and the Great Recession would make the Great Depression appear as a fresh Spring day. This is a game of Russian Roulette. How would you unwind Goldman and reform the markets without causing financial Armageddon?
But it will be a lot less pain than we're going to get if we don't stop what we've been doing for the last 10-15 years.
Sometimes doing the right thing hurts.
Of course! The infamous one-sided synthetic short. We're doomed. LOL!
I do think he wants to subborn ourselves to the so-called world, part of the marxist poison he swallowed years back I think. to destroy us, don’t think so, but possible. As for “hip” I meant on to it, in on. He is otherwise usually un-hip, school-marmish, but meaner than Al Gore’s style.
How? Court order announcing CDS are illegal insurance contracts. There will be a flurry, but it will all even out and reduce risk and instability. Only the Wall Street Banks are playing with this stuff, the others will survive fine.
I like Limbaugh’s opinions on politicians’ personalities. I think he has personal responsibility for the “nationalization” mass hysteria a few years back that gave Bernanke and Obama and Geithner a phony ideology to immunize Wall Street banks from liquidation.
Yeah I agree on Limbaugh and thanks for your view on Obama.
But....we are talking about 595 trillion, yes ‘t’rillion, dollars of derivatives here that are unregulated. We are talking about financial Armageddon, no exaggeration, no hyperbole. They are indeed too big to fail.
I understand completely about CDS and why they are called CDS and not ‘insurance’ in order to escape regulation by playing on word games.
But I think you make them illegal, you light the fuse and no one knows what happens next but the risk is complete collapse of financial markets worldwide. Russians know this and have been predicting it happens this year, just in time for elections? Make Goldman the bogeyman? Goldman is an eeevil republican leftover from the Bush era? Maybe, maybe not.
The collapse of the markets means hundreds of millions of people lose their retirements, their savings, runs on the banks, worthless fiat currency, run on the banks, devaluation, hyperinflation, riots and on and on FOR STARTERS. Do I sound like a conspiracy nut? Couldn’t happen here?
Strangely what may prevent Obama from lighting the fuse is terrorism, the threat thereof. If Obama is not completely suicidal, he will act to keep the financial capacity strong because much of the WOT depends on the financial sector, monitoring money flow, transactions, payoffs etc.
what money is goldman shorting INto?
what is the value they are recieving?
if it is worthless to worthless then it is all deckchairs on the titanic.
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