Silicon Investor (SI) -- The First Internet Community

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.

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

To: Hawkmoon who wrote (1533)	3/16/2010 5:22:57 AM
From: axial	3 Recommendations Read Replies (2) \| Respond to of 2794

Thanks Hawk - There's comfort, not only in what was said, but in who said it: Gary Gensler, head of CFTC. It's funny how few very few have commented on this important issue. Vi (Coming US Dollar Crisis) has given it some attention, mostly as "derivatives" as opposed to CDS. Mish? Not much. Very few understood the enormous systemic risk and consequent scams being perpetrated by financial elites worldwide. --- The extent to which people have been (and still are) deluded is difficult to understand... "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." Message 25763579 No comprehension of systemic risk, or the underlying realities and scams of which Greece is just the latest example. Just the religious fervor of free-market evangelism, consequences be damned. You've gotta wonder, who are the real "imbeciles" on SI? Fortunately, few here are persuaded by pseudo-intellectual bullying. --- On the subject of the Greek CDS scam, get this: "The risk that Greece will be unable to repay its bond investors may be exaggerated, according to Standard & Poor’s. “Capital markets have been overshooting relative to Greece’s fundamentals,” Moritz Kraemer, Frankfurt-based managing director of European sovereign ratings at S&P, said yesterday. “Greece’s default is very unlikely.” LOL! This, after weeks of scare stories in international media, threatening doom if Greece defaults. Of course, we know who raked in the profits from the panic. Greece's default was no more likely to cause a global collapse than Dubai's - which was the preceding scare story in which banksters profited from a false alarm. These guys are making a killing yelling "Fire!" in crowded theaters. Nothing made me happier than to see the EU stuff it to the banksters. Full story: EU Lays Groundwork for Greek Lifeline to Bolster Euro bloomberg.com Jim

To: Hawkmoon who wrote (1533)	3/16/2010 9:07:21 AM
From: axial	3 Recommendations Respond to of 2794

"It is common sense, enforced by insurance regulators, that a person is not allowed to buy fire insurance on his neighbour's house and then burn it down to collect on that insurance. Yet that is exactly what is done in the market for credit default swaps. It is the scourge that has led banks to foreclose on the homes of millions of Americans. It is the scourge that haunts Greece and all of us." It's Speculators vs. Democracy businessinsider.com Jim

To: Hawkmoon who wrote (1533)	3/19/2010 9:22:21 AM
From: axial	1 Recommendation Respond to of 2794

Hawk, thought you might be interested in this lame defense from the ISDA... History’s Case Against Naked CDS “A simplistic analogy has surfaced and been repeated that compares CDS to fire insurance. People who use this analogy point to insurance law prohibiting individuals from buying insurance on a neighbor’s house so that they will not burn it down to collect the insurance proceeds. Under this analogy, writing naked CDS is equivalent to buying such insurance and committing arson and should therefore be banned.” The analogy refers to something called the principle of insurable interest, or the requirement that those taking out insurance must have exposure to either a gain or loss, particularly a loss, on the subject of the insurance. England in the 1700s recognized the danger inherent in taking out insurance on property. As CFTC Chairman Gary Gensler remarked last week: “English insurance underwriters in the 1700s often sold insurance on ships to individuals who did not own the vessels or their cargo. The practice was said to create an incentive to buy protection and then seek to destroy the insured property. It should come as no surprise that seaworthy ships began sinking.” And so Parliament responded with the Marine Insurance Acts of the mid-1700s. For its part, the ISDA statement continued: “The analogy leaves some important points unsaid: How, for example, can buyers of naked CDS actually burn down the house? It is important to remember that for every buyer of CDS there is a corresponding seller who benefits when the reference entity’s credit quality improves. It is unclear how such activity alone can lead to a default by a sovereign government on bonds it has issued. Such claims ignore the commonsense facts available and fail to show either cause or effect. These claims also ignore short selling activity in Greek government bonds, which certainly has a greater effect on Greek bond prices as it involves selling the actual instruments in the market.” blogs.wsj.com --- How? Disingenuous question! I think everyone here could tell the ISDA how the arsonists have been working, and who's making money. Jim