Ok. I read this bilge.
Major threat #1. The sheer size of the derivatives market. At that time, the global market for derivatives was $285 trillion.
Why is the size of something a threat? I guess the fear mongering theory here is that the bigger it is, the harder it will fall. Can we say that about government?
Now it’s $592 trillion. Its six-year compound rate of growth: A shocking 34.5 percent per year!
Assuming that's true why is it "shocking"? Must be another claim that rapid growth is dangerous. Why? No one knows.
Major threat #2. The Lack of Transparency.
I'm surprised the author didn't trot out "lack of accountability". "Transparency" and "accountability" seem to be so trendy these days. So how transparent should all accounts in all banks and institutions be? In my judgement they should be perfectly opaque. Else, we have a society of perfect distrust, and nothing constructive can proceed in that environment because evrything that does proceed wil do so perfectly opaquely. In particular, black markets would dominate.
We railed against over-the-counter (OTC) derivatives, representing 96 percent of all derivatives held by U.S. commercial banks. We warned about the lack of disclosure to investors, the lack of standard pricing and the fact that “two financial institutions can trade whatever the heck they want … and no one but the parties involved knows precisely what the contracts are, or what their value really is.” (Page 3)
So what? None of that had anything to do with the financial crisis. Let's say there was perfect disclosure. Does anyone think the fool public would have stopped their RE speculation then? It is disclosed that a lot of questionable paper is being pushed. Therefore, RE prices will stop rising? Hah!
Now, in Senate Banking Testimony, SEC Chairman Mary Schapiro has admitted that
She says the CDS market is undisclosed. So what? In the depths of the financial crisis the CDS market contributed little, if any, sturm und drang, much to the surprise of a lot of goofballs like the clowntown kiddies who wrote this tripe. They sell their bs and fear to suckers who want to fan their own fear.
Major threat #3. Too much in the hands of too few. In our 2006 “Global Vesuvius” report, we wrote:
In th hands of a few? Is he referring to government? Of course not. He isn't referring to anything. It's called fear mongering innuendo, and it plays well in places like SI where the literacy is extremely low.
“There are close to 9,000 commercial and savings banks in the U.S. But at midyear … 97% of the bank-held derivatives in the U.S. are concentrated in the hands of just five banks.” (Page 3)
Thank god. The problem lies more with the smaller banks. In any event why does "holding derivatives" pose a p[roblem? The author never answers this question. No one ever answers it. They don't because they don't have a reason. They sell or offload fear. Don't take it from them. Instead, shove it up their asses.
“The markets are concentrated and … one of a small number of major dealers is a party to almost all transactions, whether as a buyer or a seller. The customers of the dealers appear to be almost exclusively institutions. Many of these may be highly sophisticated, such as large hedge funds and other pooled short-term trading vehicles. As you know, many hedge funds have not been subject to direct regulation by the SEC and, accordingly, we have very little ability to obtain information concerning their trading activity … “
That's good. The problems start when the SEC tries to regulate what they don't understand, and thereby create bottlenecks and complexities that precipitate the very thing the myths have brought the people to believe will occur. Meanwhile, idiots are cheering on these regulators. Self fulfilling prophecy, except for one thing. The black opaque market which settles outside of "transpartency" and "accountability" has to do so on free market principles alone. Every transaction is between two individuals instead of between members of a group whose group status makes them totally irresponsible. When you have two individuals transacting in derivatives since derivatives are zero sum, you have perfect integrity. Why? Because if one guy doesn't pay, the other guy puts a hit out on him.
“Perhaps the most important issue for the Committee to understand is that the structure of the OTC derivatives market today is a function of the flaws in the business models of the largest dealer banks, including JPMorgan Chase [JPM], Bank of America and Goldman Sachs [GS]. These flaws are structural, have been many decades in the making, and have been concealed from the Congress by the Fed and other financial regulators.
What is this idiot saying? concealed by the FED? Right there you know this guy doesn't have a clue. Just another con artist just like the 99% of Amricans walking around. That's what poverty does to people. Turns them into con artists.
Ok. I've done my bit for PMers. I'm done with imbeciles. |
