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Politics : Welcome to Slider's Dugout
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From: SliderOnTheBlack6/16/2005 9:10:00 AM
   of 50397
 
.... the "D" Word.

Derivatives:

In yesterdays Financial Times JP Morgan reported earnings 20% lower than the corresponding quarter last year, citing "Turmoil in the Credit (Derivatives) Markets."

Ditto for Bank One.

One of Europe's largest Hedge Funds - GLG suffered massive losses of 14% in just the last quarter from "Credit Derivatives."

HSBC quote/unquote "revealed" - "marked rises in bad debt."

Citibank & JP Morgan just paid out Billions (Merrill, Goldman, CSFB as well)related to Enron Fraud.

Goldman get's caught with it's internal traders frontrunning their own Instutitional Clients...and today announced earnings from fixed income trading down - 20%.

Banca Popolare di Intra sued and just announced a settlement with Bank of America over a CDO (collateralized debt obligations/credit derivatives)...in a case alleging Fraud & Misrepresentation ...which had Popolare Management basically saying - they didn't understand the complexity, or the risk of the deal and it wasn't properly disclosed.

- makes one wonder just how much of the Derivatives Bubble anyone understands ?!?!

FNM with Billions & Billions in Fraudulent Accounting imho; is Enron-walking...

GM Debt to Junk ... with massive implications for the Credit Markets....Pension Funds teetering at the abyss.

Warren Buffet accurately quantified the Derivatives Risk to the Markets as - "weapons of mass financial destruction."

...and yet Derivatives have exponentially ramped since the LTCM Meltdown that Rocked the Markets.

What will ultimately be more destructive... 1 LTCM, or 50-100 Minnie-Me's that ultimately fall in dommino fashion, ultimately at $$$ multiples to LTCM's total exposure ?

Gold is Money & the Currency of Last Resort... it is also the preeminent Insurance Policy to the above.

We've reached a peak of Central Bank Intervention in Global Markets & Currencies, simultaneous to the Individual Market Players taking on unprecedented leveraged Risk to a Global Financial System that has reached a tipping point of Imbalance that must ultimately be re-balanced.

...and only 1 asset stands historically as a Safe Haven to violent rebalancing.

Gold.

PS: ...check the historic valuation ratio between Gold & Crude Oil.

...not only is Gold only at approx $175 oz in 1980 $ terms, but it is at a historic discount level to Crude Oil.

...imbalances will ultimately balance.
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