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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: basserdan who wrote (47203)	3/7/2009 1:56:03 AM
From: NOW	Respond to of 219712

I was thinking about how casual the disregard for the rule of law has become on Wall Street, and how confident the money trust is in our apathy and our absence of the will or the means to interfere with their schemes. And well they should be. As nothing has, and likely nothing will. And nothing CAN at this point. the time for that has long since past i am afraid

To: basserdan who wrote (47203)	3/7/2009 2:51:55 AM
From: Haim R. Branisteanu	5 Recommendations Read Replies (1) \| Respond to of 219712

the new very profitable financial play for immense riches is going to the moon. It starts like this - 1. group of financial outfits target a company or sovereign state etc. with substantial outstanding debt - several billions or more the better 2. the group acquires CDS on this debt at very low prices 3. the group launches various negative rumors about the target until one starts to stick 4. the group buys more CDS on the same debt driving the CDS prices up as result of demand and negative rumors 5. market participants notice the rise in CDS prices take the rumors more seriously and start to sell part of the debentures - just in case 6. Price of debenture fall more than the price of the original bought CDS 7. the financial group piles on more CDS and sells short the debenture - doubling up 8. debenture fall even more - over let say 10% - financial group buys the discounted debentures and also buys more CDS's 9. the prices of the CDS continue to rise - debenture in good standing are under selling pressure and the financial group has the perfect trade in store - no losses and potential of doubling up or even triple up .... or you name it Please remmember that margin requirements for debenture are very low in most cases less than 10% of face value This is IMHO the newly secret of relentless fall in the capital markets few are grabbing billions in illegal profits due to a loophole in regulation - CDS are not defined as a insurance product to insure the financial asset it is supposed to insure - but a derivative like an put option on the debt Today this evolved in a pure speculative practice which is ruining international trade, financial institutions world wide, states and even countries this practice must and should be stopped and the issuance of speculative CDS without owning the underlying debt should not be permitted by law Passage of such an international law will shore up financial markets and bring about more stability. Failure to act promptly on this issue will bring more bank and financial institutions failure and transfer wide held funds into the hand of few speculator that will continue to terrorize the world – main suspects are originated in the US but they do not act alone and that is one reason why the US congress does not act swiftly on legislating the issuance of CDS ______________________________________________ Remark I was involved in structuring this type of "puts" with hedge funds but for a positive purpose over 15 years ago. Companies that sold "widgets" at the time to emerging markets including Brazil needed to liquefy their receivables and / or notes which where spread over several years. By issuing a "put" or in today lingo a CDS on those trade receivables the company was able to borrow at very low rates up to 70% to 75% of the face value of the receivables form a commercial bank. (EXIM bank does it all the time and most countries have a similar entity – due to the rapid growth of international trade those institution reached their limit and therefore the help of other financial institutions was needed) The financial institution issuing the "puts" usually a hedge fund with several billion in assets was insuring 50 to 100 million in trade receivables, very rarely more than that therefore it did not grow to a substantial risk and in most cases added to their returns.

To: basserdan who wrote (47203)	3/7/2009 11:05:18 AM
From: carranza2	13 Recommendations Read Replies (2) \| Respond to of 219712

So AIG sells insurance for which it has no collateral, thinly disguising it as credit default swaps, to those with no financial interest in that being insured (which is illegal if insurance), and you and I get to pay those who bought the swaps and are now collecting big on the destruction of the market and the American way of life. Not a mention of simply making those illegal and calling it what it is - illegal insurance which should be null and void. Nope. Instead, we get to pay out hundreds of billions, to Goldman and the Saudis and whomever else is fortunate enough to be a counterparty - but we can't know to whom the billions are being paid. Again. That's a secret. Not to me it's not a secret. I have been harping about the relative ease with which the CDS imbroglio can be killed: Simply have some small state commissioner of insurance declare CDS illegal insurance. Phil Gramm prostituted himself to make them fall outside federal regulation. But the McCarran Ferguson Act still exists. To the extent inconsistent with federal law, insurance products are regulated by the states. Under the law of every state I know, the holder of a policy must have an insurable interest in the object of the insurance. Most CDSs insure against some sort of risk but few holders have insurable risks. They are bets at the casino, the equivalent of allowing me to buy life insurance on some poor homeless wretch then collect the proceeds when he croaks unexpectedly and violenty. And, by the way, I have a perfect alibi. Don't forget this: the holders of CDSs, especially the ones who don't hold the underlying instrument, have a vested interest in default. The bet is relatively small but the payoff, with your tax dollars, is huge. It is an enormous scandal. I am thinking class actions.