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Non-Tech : Derivatives: Darth Vader's Revenge -- Ignore unavailable to you. Want to Upgrade?

To: axial who wrote (1272)	3/6/2009 10:21:08 PM
From: Hawkmoon	Respond to of 2794

Yep.. Seems he and Soros are displaying the same sentiment. The "shadow banking system" has gotten outta control and threatened the rest of the world financial system (and picking taxpayer pockets). The heart of the problem is that when they initiated FASB 157 for real property assets (or assets derived from real property), it was pretty simple to devastate their value by manipulating the CDS markets. You could drive up the spread on CDS' by shorting the financial surety companies (AIG, ABK, MBI, XL.. etc) to the point where the RA's lowered their credit ratings and ruined their ability to write new business. Of course, the RA's played their role by forcing AAA toxic debt upon the insurers who had no choice but write CDS' on them or see themselves rendered non-competitive. So now we're in a situation where no one wants to write CDS contracts because they face far greater loss potential than those folks buying them.. This has GOT TO CHANGE and the insurance industry reinvigorated and backstopped before this financial recovery can begin. Either we enable a strong financial surety industry, or we'll find the taxpayers forced to provide those services. Hawk

To: axial who wrote (1272)	3/6/2009 10:48:44 PM
From: IngotWeTrust	Respond to of 2794

Well, doesn't HE have his nerve...He wants to get even for the system taking his reputation away from him for Blowing Up Ashanti, Cambior, and LTCM? And sorry, Bloomy, but it was a consortium of 19 banks, not 14. By the time the history books are written on this chapter of Scholes, and Simmons, Soros, etc., it will probably be down to "5 banks all of whom are no longer in business..." The sad part is, Greenbritches orchestrated it that fateful weekend ---the first time gold crossed into $420 territory after 1980's "top"--and I have the list on an old computer hard drive somewhere. Among those 19 banks in the consortium, were multiple Central Banks from all over the globe. Talk about the inmates running the asylum...God Have Mercy. This is tantamount in my not so humble opinion as tacit admission of culpability in this whole quant OTC debacle. And it is tacit admission that this was his and other quants endgame all along. This is simply bizarre coming from his lips!

To: axial who wrote (1272)	3/6/2009 11:11:48 PM
From: Hawkmoon	Read Replies (1) \| Respond to of 2794

Trig, Forgot to comment about the following: Scholes also recommended moving the trading of credit-default swaps, asset-backed securities and mortgage-backed securities to exchanges to allow for “a correct re-pricing” of the assets. I'm not sure how moving these to an exchange will help. For an exchange to work, there has to be liquidity and the ability for the "specialist" to take the other side of a position when no one else will step up to the plate. It will only work if credible counter-parties are permitted to engage in such transactions. Nor more participation by speculators with no skin in the game and seek to trade them short term. A loan is something that is typically a long-term financial transaction and it's not smart to permit short-term traders to meddle to the point where they control all the trading. Hawk