American Presidential Politics and foreign affairs Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : American Presidential Politics and foreign affairs

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: TimF who wrote (29722)	10/2/2008 11:46:47 PM
From: DuckTapeSunroof	Read Replies (1) of 71588

Re: "Its the new and complex part that's most of the danger, not as much the "unregulated" part." In the particular case of the Credit Default Swap markets I don't believe that is true. Since they HAVE NO ASSIGNED REGULATOR (anywhere.. not in the US, not in London, not anywhere), and the trades are simply counter-party-to-counter-party.. the whole thing expanded rapidly into the the largest financial BUBBLE in the history of the world. And, in common with many other financial bubbles, but I think PARTICULARLY IN COMMON with one of the world's earliest and most FAMOUS financial bubbles --- the South Seas Bubble --- this whole unregulated market quickly turned into a LIAR'S MARKET... because there was no regulator, no assigned exchange to trade on, no one to VERIFY any of the claims that counter-parties made. In one (already notorious) example: an unregulated Hedge Fund sold BILLIONS (in face value) of Credit Default Swaps (essentially: insurance contracts) to a large European Bank --- YET ONLY PUT A COUPLE OF MILLION DOLLARS (less then 1% of the policy value that they sold to the bank) IN A RESERVE ACCOUNT TO BACK THE POLICY! So... when the bank went to collect on the insurance it thought it had bought there was NOTHING THERE. They got STIFFED. The Hedge Fund had been collecting their annual premiums and refused to pay off on the policies. This is happening all over... which is why there is a credit crisis now that is global in nature. No institution knows IF IT CAN TRUST ANY OTHER COUNTER-PARTY... NO MATTER HOW LARGE THEY MAY BE. The whole CDS thing (literally: Trillions) turned into a LIAR'S MARKET... and the credit crisis, the lack of trust in financial institutions that is sweeping the globe, if far larger then the lesser sized American sub-prime market. That is what happens when there ARE NO COPS on the beat... no rules, no standardized products or regulated exchanges where they can trade with full transparency and ready price disclosure.... Liars run amok. (It's just simple human nature: if there is a legal opening providing a way to cheat and make hundreds of millions or even billions... there will never be a shortage of people or institutions willing to drive straight through that opening, and laughing all the way. Greed is a constant in human affairs....)

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next