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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Pitera who wrote (12637)	5/22/2010 3:09:19 PM
From: Hawkmoon	6 Recommendations Respond to of 33421

One thing about CDS is that they require huge amounts of shaky loans and misspent capital to yield their maximum profit and wealth transfer. We had an abundance of those throughout the last decade and now the seeds of destruction sowed by that shaky lending is reaping a profitable CDS harvest. J. Paulson and Goldman Abacus scandal are a prime example of this scheme to defraud investors. Capitalism used to be about having "skin in the game". Now it's just about passing on the risks to some "greater fool". But eventually you run out of fools (at least ones with any money left). I hope in your CDS book you're writing that you mention Blythe Masters created by CDS and Carbon Credit schemes. No CDS history would be complete without mentioning her role. Btw, any study of the CDS problem should incorporate a review of the Marine Insurance Act in 1746 and how the events that led to it are so similar to how CDS are being utilized. The Act came about because speculation on merchant cargoes started to involve speculators who would act to make sure the insured cargo was lost so they could collect the insurance. In 1746, Parliament passed the Marine Insurance Act, requiring anyone seeking to collect on an insurance contract to have an interest in the continued existence of the insured property. Thus was born the insured-interest doctrine. The indemnity doctrine, which precludes a buyer from insuring property for more than it’s worth, soon followed. The point of these rules is to limit insurance contracts to trading existing risks and not to create new risks by giving buyers of insurance incentive to destroy property. The doctrines have been part of insurance law in both England and the United States (which in 1746 were colonies under English common law) ever since. projo.com Hawk