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Norman Bernstein
12-23-2014, 08:48 AM
Well, not so much....


“The U.S. economy posted its strongest growth in more than a decade during the third quarter, supported by robust consumer spending and business investment,” the Wall Street Journal (http://www.wsj.com/articles/u-s-third-quarter-gdp-revised-up-to-5-0-growth-1419341481) reports.

“Gross domestic product, the broadest measure of goods and services produced across the economy, grew at a seasonally adjusted annual rate of 5.0% in the third quarter… That was up from the second quarter’s growth rate of 4.6% and the strongest pace since the third quarter of 2003.”

Keith Wilson
12-23-2014, 10:34 AM
But . . But . . . Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!! Benghazi!!

Boston
12-23-2014, 11:07 AM
After that idiot Reorge, there wasn't much to do but improve. That and we're not done yet with that policy of borrowing our way out of debt. Have we paid back all the money borrowed from the Fed ? How many trillions was it again ?

There's a lot more to it than just who's sitting in the big chair. I put exactly zero faith in either party

slug
12-23-2014, 11:50 AM
The economy boomed under Greenspan.

Has the American economy been prepared for the next bust ?

Norman Bernstein
12-23-2014, 11:55 AM
Has the American economy been prepared for the next bust ?

Yes, we're all set for it, now that the conservative lapdogs of the financial services industry have stripped back Dodd-Frank so that the US Treasury will now be on the hook for their derivatives business that goes bad.

Yeah, I'd say we're prepared.... to HAVE another collapse, not to PREVENT one.

RodB
12-23-2014, 12:03 PM
This from a Senator... illustrates some truth...

RodB


Tuesday’s mid-term election is about many issues: the president’s disastrous foreign policy; soaring health care costs under the Obamacare law; concerns about the government’s preparedness for the Ebola virus.


Given these and other red flags for voters, in recent weeks President Obama has attempted to make this election about the issue he believes is most favorable for his party: the economy.
In a speech about his economic agenda a few weeks ago, the president told an audience, “I am not on the ballot this fall… But make no mistake: these policies are on the ballot — every single one of them.”
President Obama is correct; his policies are on the ballot on Tuesday. And voters deserve to know exactly what those policies have accomplished for our country as they head to the polls.
The results are stunning.
1. Soaring debt: The national debt has nearly doubled since President Obama’s election. Today it stands at 74 percent of the economy, slowing economic growth and threatening ournational security. According to the nonpartisan Congressional Budget Office (CBO), “The large amount of debt could also compromise national security by constraining defense spending in times of international crisis or by limiting the country’s ability to prepare for such a crisis.”
2. Skyrocketing mandatory spending: CBO projects that mandatory spending and interest on the debt is projected to consume 94% of all federal revenues 10 years from now, squeezing out funding for other priorities like education, health research, defense, and infrastructure.
3. Struggling workforce: Since 2009, the percentage of working-age Americans who are not in the labor force has reached near-record levels. During that time, the number of adults outside the labor force has increased by 12 million. There are fewer full-time jobs in America than when the recession started. Nearly 29 million of the 124.5 million Americans in prime working years – ages 25-54 – are currently without a job.
4. Stagnant incomes: Unfortunately, most American workers have not seen their incomes increase. Between August 2013 and August 2014, real average hourly earnings increased only 0.4 percent, failing even to keep up with inflation.
5. Social Security bankruptcy: CBO projects that Social Security will go bankrupt in 2032, a year earlier than the Social Security Trustees predicted last year. The Disability Insurance Trust Fund is in the direst condition, as CBO expects it to be bankrupt as early as October 2016.
Today, we live in a country where middle class income is falling, too many Americans of retirement age are working to pay bills, and a large number of trained workers are unable to find jobs that match their skills. Nearly a third of those between the ages of 18 and 34 are still living with their parents. And the average American citizen is more likely to be receiving a disability check than working in a manufacturing job.
In President Obama’s own words, these are the policies on the ballot this November. For six years, our country has tried the president’s approach, and it has not worked.
America’s road back to prosperity requires a change of policy. Republicans are committed to working on bipartisan solutions to spur job creation and economic growth, including increasing exports, reforming our broken tax system, reducing the deficit and unlocking domestic energy resources.
With the right agenda, our economy will grow and American workers will flourish. My hope is that we start down that path on Tuesday.
Republican Dan Coats represents Indiana in the U.S. Senate. He is the senior Senate Republican on the Joint Economic Committee.

http://www.breitbart.com/big-government/2014/11/03/obamas-economic-policies-have-failed-america/

slug
12-23-2014, 12:04 PM
I dont know. Im not a finance man. I do suspect that the US has shot all its financial ammo.

How the US will Respond to the upcoming collapse in the junk bond market will be interesting

i have a feeling the reason why the financial industry wanted a relaxation of Dodd Frank is they they see this bond monster growing

Norman Bernstein
12-23-2014, 12:08 PM
How the US will Respond to the upcoming collapse in the junk bond market will be interesting

There is a coming junk bond market collapse? Can we take your word for it? :):)


i have a feeling the reason why the financial industry wanted a relaxation of Dodd Frank is they they see this bond monster growing

And this helps exactly HOW?

The 'relaxation' you refer to is unknown... but the latest budget bill permits Wall Street to take risky derivative bets on securities that would be backed by the Gov't.... letting the taxpayers take the risk.

How, exactly, is this good for america?

slug
12-23-2014, 12:11 PM
All I can do is read. http://www.bloomberg.com/news/2014-06-16/bond-market-s-liquidity-threat-revealed-in-derivatives-explosion.html Im not literate in high finance

RonW
12-23-2014, 12:28 PM
Norm -
but the latest budget bill permits Wall Street to take risky derivative bets on securities that would be backed by the Gov't.... letting the taxpayers take the risk.

It doesn't, and is another possible banker bailout program. It should have never been passed, but the senate under hairy the reed hasn't passed a budget in years, just continuing resolutions. This will change next year....And this bill was a quick put together before the senate changes hands......

Most people have no idea of what a derivative is, or how they work......

Norman Bernstein
12-23-2014, 12:34 PM
It doesn't....

Oh, really?


...and is another possible banker bailout program.

Well, that might be true... but the reason they'd need a bailout is because Republicans (mostly, but with SOME Democratic support) stripped away the provisions that prohibited derivatives trading backed by government guaranteed funds.


Most people have no idea of what a derivative is, or how they work......

It doesn't look like YOU do, either. But that is understandable.... you wouldn't want to face the fact that financial leverage, and the pressure on Congress to ignore it, is a hallmark of bank-supported politicians, MOST of whom are Republicans. Jamie Dimon himself lobbied for this latest travesty.

slug
12-23-2014, 12:40 PM
Well...its the responsibilty of the financial industry to keep the economy growing. The only way that America can pay off its debt is with growth. If relaxing rules leads to more growth , it may be suitable.

best not to take Democrat, Republican , he didit, she did it, its all thier fault , political stands.

RonW
12-23-2014, 12:42 PM
Norman --
It doesn't look like YOU do, either. But that is understandable.... you wouldn't want to face the fact that financial leverage, and the pressure on Congress to ignore it, is a hallmark of bank-supported politicians, MOST of whom are Republicans. Jamie Dimon himself lobbied for this latest travesty.

How is it that you can come up with out of thin air such silly uninformed statements...Would you be so kind to inform the bilge of what you think derivatives are, how they work and exactly what was and is the leverage ratio.......

John Smith
12-23-2014, 12:43 PM
Yes, we're all set for it, now that the conservative lapdogs of the financial services industry have stripped back Dodd-Frank so that the US Treasury will now be on the hook for their derivatives business that goes bad.

Yeah, I'd say we're prepared.... to HAVE another collapse, not to PREVENT one.

Think we can get a bill prohibiting bonuses to CEO's if their company gets bailed out?

John Smith
12-23-2014, 12:45 PM
I have never given credit/blame for my financial position to any presidential policy.

Many people have had stagnant to falling income for the past 10-20 years. I don't see much improvement. I don't know if those people blame presidents or not.

I think the ACA punished a lot of people who did not deserve to be punished.

I think recent government policies have increased the gap between the rich and the poor.


If you want to measure how well the rich (including me) are doing, the growing GDP, rising stock markets, or other government indicators are unimportant. The rich never do poorly.

Also gave a lot of people health insurance who didn't deserve it, right?

slug
12-23-2014, 12:55 PM
Thats a false promise. If the banks fail the government has no choice but to step in or the entire economy will collapse.

RonW
12-23-2014, 01:04 PM
Thats a false promise. If the banks fail the government has no choice but to step in or the entire economy will collapse.

That is wrong, literally hundred of banks all over this country fail every year. The bankers are loaning money that they are issued through the federal reserve system, the credit markets.

RonW
12-23-2014, 01:05 PM
There was no reason to punish one group of people to give health insurance to another group. I have always been in favor of free health care for the bottom 50%. I have also been against welfare for the top 10%.

So those in the top 10% who benefited don't desreve it. In my opinion.

Excellent......

slug
12-23-2014, 01:15 PM
Hmm....

lets hope one of those big boys doesnt blow. I suppose it could be bought by another big boy , but soon there would only be one bank and if that baby blew the Chinese would have to come to the rescue

http://s10.postimg.org/jwjxqjhih/image.jpg (http://postimage.org/)
subir fotos online (http://postimage.org/index.php?lang=spanish)

Norman Bernstein
12-23-2014, 01:40 PM
It might be helpful to understand WHY the change to the Dodd Frank legislation could result in putting the taxpayers on the hook for risky derivative trades (bear in mind that this is from the Wall Street journal, and constitutes opinion, not news):




What is the end-user provision intended to do?

Supporters, including House Financial Services Committee Chairman Jeb Hensarling (R., Tex.), say the language is intended to clarify – not change — the 2010 Dodd-Frank financial law in a manner that ensures nonfinancial firms entering into swaps to hedge business risks aren’t ensnared in costly regulations facing banks and other financial firms.
What would the legislation alter?

It would amend existing exemptions in the Dodd-Frank law to ensure manufacturers, ranchers and other companies are carved out from margin and capital requirements imposed by the law. Swaps, which were at the heart of the 2008 financial crisis, are used by farmers, manufacturers and other end users to hedge everything from the cost of oil and jet fuel to food prices.

Who is opposed and why is this controversial?

Rep. Maxine Waters (D., Calif.) and other congressional Democrats said it sets a bad precedent to roll back Dodd-Frank provisions as part of must-pass legislation in the lame-duck session of Congress, though it is unclear if they will vote against the bill. In a statement Wednesday, the White House said it “strongly opposes” the inclusion of modifications to Dodd-Frank in the terrorism insurance bill, but stopped short of saying President Barack Obama would veto the legislation. “Broadening Dodd-Frank’s statutory exemptions is a complicated issue with serious implications for the health and stability of the nation’s financial markets,” the White House said.

The concerns over the end-user provisions come as Senate and House lawmakers have reached a separate deal to roll back another piece of the Dodd-Frank law as part of $1.1 trillion federal funding bill. That legislation includes provisions scaling back Dodd-Frank requirements that banks to “push out” some of their riskiest derivatives trading activities into affiliates that aren’t eligible for federal backstop programs. Former Rep. Barney Frank (D., Mass)., a namesake to the Dodd-Frank law, encouraged his former colleagues Wednesday to vote against the spending plan, saying it constitutes an attack on the Wall Street regulatory overhaul.


Is legislation needed to ensure end users are exempt from Dodd-Frank requirements?

Supporters say failure to enact the legisaltion will inflict serious harm on Main Street businesses. Still, the need for the legislation has arguably dissipated since U.S. banking regulators earlier this fall agreeed to effectively carve out end users from margin and capital requirements on certain swaps. The banking regulators, including the Federal Reserve, had previously insisted they couldn’t formally exempt end users from the requirements. They altered their stance after years of lobbying by companies like General Electric Co., Cargill Inc. and Duke Energy Corp. and after an international body of regulators put out recommendations last year that didn’t include imposing margin for end users.
Other regulators, namely the Commodity Futures Trading Commission, had already sought to exclude end-users from their rules.




So, why did Wall Street argue so strenuously to strip the provision out of Dodd Frank?

Because they want to be able to make risky derivative trades and STILL retain the possibility of federal bailouts, should they go south.

Anyone here going to seriously argue that this is a good idea?


Well...its the responsibility of the financial industry to keep the economy growing. The only way that America can pay off its debt is with growth. If relaxing rules leads to more growth , it may be suitable.

Wasn't it the relaxed rules themselves that put us into the hole back in 2008, to begin with? If lack of effective regulation was part of the cause of the financial collapse, then by what logic would doubling down on lack of regulation result in a different outcome, eventually?

ljb5
12-23-2014, 01:49 PM
This from a Senator... illustrates some truth...

Just about every statement there is either an outright lie or totally misleading.

Let's take them out:




1. Soaring debt: The national debt has nearly doubled since President Obama’s election. Today it stands at 74 percent of the economy, slowing economic growth and threatening ournational security.

"Nearly doubling" is actually not so bad.

The debt more than doubled under Bush and nearly tripled under Reagan.


2. Skyrocketing mandatory spending: CBO projects that mandatory spending and interest on the debt is projected to consume 94% of all federal revenues 10 years from now, squeezing out funding for other priorities like education, health research, defense, and infrastructure.

Mandatory spending is mandatory it has been enacted by law, or is required by the Constitution. You can't blame that on Obama.


3. Struggling workforce: Since 2009, the percentage of working-age Americans who are not in the labor force has reached near-record levels.

The Labor Force Participation Rate is going down mostly because Baby Boomers are retiring.


During that time, the number of adults outside the labor force has increased by 12 million.

It's called retirement.


There are fewer full-time jobs in America than when the recession started.


Nearly 29 million of the 124.5 million Americans in prime working years – ages 25-54 – are currently without a job.

A lot of them are housewives. That number has not changed significantly since Obama has been in office (or due to anything he has done.)


4. Stagnant incomes: Unfortunately, most American workers have not seen their incomes increase. Between August 2013 and August 2014, real average hourly earnings increased only 0.4 percent, failing even to keep up with inflation.

That's been going on for like 20 years. It's actually improved a lot recently -- especially in the last month, with a 0.9% increase.


5. Social Security bankruptcy: CBO projects that Social Security will go bankrupt in 2032, a year earlier than the Social Security Trustees predicted last year. The Disability Insurance Trust Fund is in the direst condition, as CBO expects it to be bankrupt as early as October 2016.

Again: not Obama's fault. Maybe the Republicans should stop trying to kill this.

You seriously need to stop getting your information from breitbart. When they're not out-right lying to you, they're misrepresenting everything.

Seriously, after the Bush crisis, how can you even pretend that Republican plans have worked? Have you forgotten who was in office for seven years leading up the crisis? Do you really think you can blame Obama for something that happened before he was elected?

RonW
12-23-2014, 02:33 PM
Norman bernstein says ---
Because they want to be able to make risky derivative trades and STILL retain the possibility of federal bailouts, should they go south.

Who says derivatives are risky, how risky are they, how much is in derivatives, what kind of failure rate does derivatives have, in fact what is a derivative ?

What say ye norman ?

Norman Bernstein
12-23-2014, 02:36 PM
Norman bernstein says ---

Who says derivatives are risky, how risky are they, how much is in derivatives, what kind of failure rate does derivatives have, in fact what is a derivative ?

What say ye norman ?

Do I really have to recite the entire history of just what happened in 2008 to you? Don't you read at all? Asking whether 'derivatives are risky' sort of presumes that you clearly DON'T know.

I can recommend a couple of books to you.... but since they weren't written by Breitbart, I'm going to presume you wouldn't read them anyhow.

RonW
12-23-2014, 02:40 PM
Do I really have to recite the entire history of just what happened in 2008 to you? Don't you read at all? Asking whether 'derivatives are risky' sort of presumes that you clearly DON'T know.

I can recommend a couple of books to you.... but since they weren't written by Breitbart, I'm going to presume you wouldn't read them anyhow.

Yep, just like I thought, you have no idea what a derivative is..........and they had nothing to do with 2008........

xflow7
12-23-2014, 02:41 PM
..........and they had nothing to do with 2008........

what?

Norman Bernstein
12-23-2014, 02:43 PM
Yep, just like I thought, you have no idea what a derivative is..........and they had nothing to do with 2008........

If you're not aware that CDS's are indeed derivatives, and fraudulently rated CDS's were a HUGE part of the financial collapse in 2008, then you're just falsely bragging about your financial acumen.

Go brag to someone else.

ljb5
12-23-2014, 02:55 PM
Yep, just like I thought, you have no idea what a derivative is..........and they had nothing to do with 2008........

Astounding!

https://www.google.com/search?q=derivatives+role+in+financial+crisis&oq=derivate%27s+role+in+&aqs=chrome.1.69i57j0l2.6174j1j7&sourceid=chrome&es_sm=0&ie=UTF-8


The root cause wasn’t just the reckless lending and the excessive risk taking. The problem at the core was a lack of transparency. After Lehman’s collapse, no one could understand any particular bank’s risks from derivative trading and so no bank wanted to lend to or trade with any other bank. Because all the big banks’ had been involved to an unknown degree in risky derivative trading, no one could tell whether any particular financial institution might suddenly implode. (http://www.forbes.com/sites/stevedenning/2013/01/08/five-years-after-the-financial-meltdown-the-water-is-still-full-of-big-sharks/)


Forget About Housing, The The Real Cause Of The Crisis Was OTC Derivatives (http://www.businessinsider.com/bubble-derivatives-otc-2010-5#ixzz3Mki6mw00)


Role of Derivatives in Current Financial Crisis (http://www.c-span.org/video/?281763-1/role-derivatives-current-financial-crisis)


CFTC head blames OTC derivatives for crisis (http://www.ft.com/cms/s/0/3be62c7a-fae8-11de-94d8-00144feab49a.html#axzz3MkioBvTF)

It's like the whole world is lining up to tell you you don't know what you're talking about.

Keith Wilson
12-23-2014, 02:55 PM
you have no idea what a derivative is..........and they had nothing to do with 2008........Wow! This is a whopper on the order of 'Qaddafi was a good guy.'

What will Ron do tomorrow to top this? Obama is a socialist? Global warming is a myth? The Pastafarians are coming to kill us all? The sun orbits the earth?

RonW
12-23-2014, 02:56 PM
If you're not aware that CDS's are indeed derivatives, and fraudulently rated CDS's were a HUGE part of the financial collapse in 2008, then you're just falsely bragging about your financial acumen.

Go brag to someone else.

CD's ??? are you referring to certificates of deposit ??? No they wasn't.....You are confuse, and I think what you mean are mortgage backed securities ..

That ain't derivatives........

Bobcat
12-23-2014, 02:59 PM
Wow! This is a whopper on the order of 'Qaddafi was a good guy.'

What will Ron do tomorrow to top this? Obama is a socialist? Global warming is a myth? The Pastafarians are coming to kill us all? The sun orbits the earth?

He's just pretending (again). No one can be that obtuse

xflow7
12-23-2014, 03:02 PM
CDS's are insurance contracts. Just like any other insurance. And just like any insurance the insured needs to check on the insurers ability to pay claims. And the insurer should check on the risk they are taking on.

Got sold a CDS that you did not need. People often get sold insurance

They are *not* like any other insurance. For conventional insurance, you have to have suffered a loss to collect on a claim. Credit default swaps were sold to investors whether or not they had any stake in the underlying debt obligations. So, a single loan obligation could go bust and 1000 investors could collect on the CDS.

That's not insurance, it's gambling.

ljb5
12-23-2014, 03:03 PM
CDS's are insurance contracts. Just like any other insurance.

Not exactly.

There is such a thing as a 'naked' CDS, in which the person who holds the CDS does not have any insurable interest in the underlying contract. That's not insurance. That's one investment (or gamble) derived from another investment. Hence the name derivative.

It has been estimated that for every CDS insuring a bond or contract, there are four naked CDS derived from it.

To put it more broadly, any insurance contract is actually a derivative. The insurance on your house does not reflect the underlying value of the house, but rather a contract that represents a value calculated from the value of the house and other factors.

Norman Bernstein
12-23-2014, 03:04 PM
CD's ??? are you referring to certificates of deposit ??? No they wasn't.....You are confuse, and I think what you mean are mortgage backed securities ..

That ain't derivatives........

No wonder you don't know anything about this issue... you can't even read. I said 'CDS's'...i.e., multiple CDS (credit default swaps).

Keith was right.... another RonW whopper.

I better drop out at this point, because I wouldn't want to laugh so hard in the middle of the afternoon. :)

xflow7
12-23-2014, 03:04 PM
CD's ??? are you referring to certificates of deposit ??? No they wasn't.....You are confuse, and I think what you mean are mortgage backed securities ..

That ain't derivatives........

He's referring to Credit Default Swaps which are essentially bets on whether a person or entity will default on their debt. If the debtor defaults, the holder of a Credit Default Swap gets paid. They are derivatives and they were central to the meltdown. I'm sorry, but you're beyond your knowledge base here.

Dave

ljb5
12-23-2014, 03:05 PM
CD's ??? are you referring to certificates of deposit ??? No they wasn't.....You are confuse, and I think what you mean are mortgage backed securities ..

That ain't derivatives........

CDS are Credit Default Swaps, not CDs (Certificates of Deposit.)

I guess I'm not surprised that you didn't know this.... but amazed that you just assumed you know better than everyone else... and didn't bother to check.

Why does it never occur to you guys to try to get some information before posting? It's like you're just so absolutely sure that you're right that you'll say the dumbest things without checking.

Keith Wilson
12-23-2014, 03:05 PM
He's just pretending (again). No one can be that obtuse.I think you may be underestimating him.

RonW
12-23-2014, 03:10 PM
Norman -
I better drop out at this point, because I wouldn't want to laugh so hard in the middle of the afternoon.

I figured you would when push came to shove in your explanation of derivatives......

Xflow7 and lbj are doing pretty good though........but not you norman........

Bobcat
12-23-2014, 03:10 PM
I think you may be underestimating him.

After his confusion with CDs and CDSs, I think you maybe right.

Norman Bernstein
12-23-2014, 03:12 PM
Norman -

I figured you would when push came to shove in your explanation of derivatives......

Xflow7 and lbj are doing pretty good though........but not you norman........

Well, it's a good thing they're explaining it to you, because you blatantly don't know anything about the subject.

RonW
12-23-2014, 03:17 PM
Well, it's a good thing they're explaining it to you, because you blatantly don't know anything about the subject.

If you would ever quit trying to pump the Obama administration and make your self look smart and everyone else and all other administrations as a blame game, you might actually learn the truth, but I doubt it........

And most derivatives are money makers. The problem lies with the bankers falsifying products and chopping and dicing and reselling many times. LBJ eludes to this above.

ljb5
12-23-2014, 03:45 PM
And most derivatives are money makers. The problem lies with the bankers falsifying products and chopping and dicing and reselling many times. LBJ eludes to this above.

I think you kinda missed the window on sounding like you know what you're talking about.

Boater14
12-23-2014, 03:54 PM
TLT, would you please start your own healthcare thread...I'm begging you. We are gain allowing gamblers to gamble with funds backed by us, the tax payers. What is so damn hard to understand? ronW, keep it up I'm peeing myself......CDs...compact disks.....Elvis greatest hits? You can't google fast enough to keep up.

RonW
12-23-2014, 03:56 PM
I think you kinda missed the window on sounding like you know what you're talking about.

B.S. norm has no idea what a derivative is, CD's have been and are certificates of deposits for the last 100 years, if you want to talk about credit default swaps then say so,

And your post is plain and simple a repeat of the old rolling stones article of naked short selling by matt taibii....do you want me to dig it up for, no, you got it..

Now walk into any bank and ask for a cd, and then tell the little girl you actually want a credit default swap and watch her look at you like what the hell........

Bobcat
12-23-2014, 04:02 PM
You're just digging yourself in deeper.

ljb5
12-23-2014, 04:03 PM
B.S. norm has no idea what a derivative is, CD's have been and are certificates of deposits for the last 100 years, if you want to talk about credit default swaps then say so,

From the context of the thread, it was quite clear.

I wasn't confused.
Norm wasn't confused.
Xflow7 wasn't confused.
Keith Wilson wasn't confused.
Heck, not even TLT was confused --- and that guy is confused about everything!

Look, RonW.... I understand that you were confused about the difference between CDs and CDS. That's a simple mistake for which you can be forgiven.... but what I don't understand is how you failed to piece it together while everyone else got it.

Anyone can make a mistake like that... but you have to develop the skills to recover and move on.

You were wrong. That's forgivable. Now dust yourself off and get back on track. Resolve to do better in the future.

================================================== ==========

By the way, you might be right when you say, "most derivatives are money makers".... but that's kinda like saying "most drunk drivers make it home safely."

The (possibly) low risk does not negate the extraordinarily disastrous consequences.

================================================== ================


Now walk into any bank and ask for a cd, and then tell the little girl you actually want a credit default swap and watch her look at you like what the hell........

Not all of a bank's transactions are handled by the teller at the counter.

While it's probably true that the teller is able to provide you with a CD, rather than a CDS, the fact that you think this proves your point just shows how much you don't know about how banks work.

RonW
12-23-2014, 04:06 PM
Well lefty liberals, let me ask you this.. Did or did not the banks engage in falsifying, and the selling of the same product to more then one customer ?

Is or is not this activity a crime............if so then why in the hell has the Obama administration and his attorney general done exactly nothing for the last 6 years ?

Bobcat
12-23-2014, 04:14 PM
Well lefty liberals, let me ask you this.. Did or did not the banks engage in falsifying, and the selling of the same product to more then one customer ?

Is or is not this activity a crime............if so then why in the hell has the Obama administration and his attorney general done exactly nothing for the last 6 years ?


Are you incapable of admitting you don't know something or made a mistake about something?

I see you're trying to change the subject.

xflow7
12-23-2014, 04:18 PM
Well lefty liberals, let me ask you this.. Did or did not the banks engage in falsifying, and the selling of the same product to more then one customer ?

Is or is not this activity a crime............if so then why in the hell has the Obama administration and his attorney general done exactly nothing for the last 6 years ?

It is generally not a crime, mainly because the financial lobby has been damnably successful thwarting any kind of regulation.

As for the term CDS:

http://www.lmgtfy.com/?q=CDS

First hit is Compact Discs. The next two are Credit Default Swaps. Certificates of Deposit first show up at #4.

Dave

Norman Bernstein
12-23-2014, 04:41 PM
Well lefty liberals, let me ask you this.. Did or did not the banks engage in falsifying, and the selling of the same product to more then one customer ?

Is or is not this activity a crime............if so then why in the hell has the Obama administration and his attorney general done exactly nothing for the last 6 years ?

I don't know where this hypothetical comes from, but if you're looking for prime reasons for the meltdown, consider, quite simply, the fact that AIG effectively insured CDS's (credit default swaps) WITHOUT either fairly assessing the risk (since the ratings agencies were corrupt), Or maintaining reasonable resrves to cover an extraordinarily risky product.

And yet, there are right wingers here who actually think that the solution is somehow LESS regulation... and that is precisely what Jamie Dimon, CitiBank, and others did, when they successfully lobbied congress to permit them to continue to engage in risky derivatives under circumstances in which the US taxpayer might again be called upon to bail them out.

If you feel bound and determined to blame some Democrats for permitting it, go right ahead, and I'll be right beside you... but if you don't recognize that the overwhelming majority of support for this came from the right, then you'd be dead wrong.

All of this occurs because the CEO's of major financial institutions face NO RISK at all, when they engage in risky financial maneuvers. If they succeed, and make a lot of money, they are hailed as the Titans of Industry (despite the fact that they are nothing more than rent-seekers, since they create NO value). If they fail, lose a fortune, and threaten the financial stability of the entire country, they just go home, carrying their multi-million dollar golden parachutes with them.

wardd
12-23-2014, 04:54 PM
isn't dodd frank just a weak version of glass steagall which worked for decades?

ljb5
12-23-2014, 04:58 PM
Well lefty liberals, let me ask you this.. Did or did not the banks engage in falsifying, and the selling of the same product to more then one customer ?

Is or is not this activity a crime............if so then why in the hell has the Obama administration and his attorney general done exactly nothing for the last 6 years ?

I think this was explained in a book called "The Best Way to Rob a Bank is to Own One."

The general gist being that the laws may not be sufficient to stop this type of behavior.

No, I'm not going to try to explain it to you. I doubt you could understand it, and even if you could, it wouldn't make a dent anyway.

You never seem to notice or care when people explain stuff to you.

========================================

It's not true to say that nothing has been done. Google LIBOR... and maybe the Chase mortgage settlement, among others.

RonW
12-23-2014, 04:58 PM
I don't know where this hypothetical comes from, but if you're looking for prime reasons for the meltdown, consider, quite simply, the fact that AIG effectively insured CDS's (credit default swaps) WITHOUT either fairly assessing the risk (since the ratings agencies were corrupt), Or maintaining reasonable resrves to cover an extraordinarily risky product.

And yet, there are right wingers here who actually think that the solution is somehow LESS regulation... and that is precisely what Jamie Dimon, CitiBank, and others did, when they successfully lobbied congress to permit them to continue to engage in risky derivatives under circumstances in which the US taxpayer might again be called upon to bail them out.

If you feel bound and determined to blame some Democrats for permitting it, go right ahead, and I'll be right beside you... but if you don't recognize that the overwhelming majority of support for this came from the right, then you'd be dead wrong.

All of this occurs because the CEO's of major financial institutions face NO RISK at all, when they engage in risky financial maneuvers. If they succeed, and make a lot of money, they are hailed as the Titans of Industry (despite the fact that they are nothing more than rent-seekers, since they create NO value). If they fail, lose a fortune, and threaten the financial stability of the entire country, they just go home, carrying their multi-million dollar golden parachutes with them.

Quite reasonable statement and I pretty much agree with you........but let's go back to 90's when they repealed the glass-Steagall act that allowed the insurance, private, commercial, investment and private banking all to mingle to create these instruments.

And let's go to HUD programs, the bush administration did nothing, and now the Obama administration has done nothing.
The dodd-franks bill is and will create a lot of problems instead of solving anything. And it probably will be appealed.

Now this derivative market, the taxpayers can not insure it, that is impossible, the last I remember the derivative market is much bigger then the size of the global economy...yea that big...

http://www.nakedcapitalism.com/2013/03/worldwide-derivatives-market-estimated-as-big-as-1-2-quadrillion-as-banks-fight-efforts-to-rein-it-in.html

I don't think the taxpayers will or can pick up the tabs on this one, but of course all or very few derivatives are going to go bad, so what is the deal......

I say the deal is bankers trying to hedge their bet and if a derivative goes bad they simply find it nice to have the taxpayers pick up the tab now and again.
After all what banker can stand a loss on anything......another scam that politicians have allowed.....

Norman Bernstein
12-23-2014, 05:03 PM
And let's go to HUD programs, the bush administration did nothing, and now the Obama administration has done nothing.

I don't know what you're talking about, but based on the rest of this thread, it's not clear that you do, either. If you're referring to the right wing myth of complicity by Fannie Mae and Freddie Mac, you'd be wrong... that canard was debunked ages ago. They were late to the party, before the collapse, and had only a very small fraction of junk loans in their portfolio when the end came. The vast bulk of the problem was with commercial banks.


I don't think the taxpayers will or can pick up the tabs on this one, but of course all or very few derivatives are going to go bad, so what is the deal......

Then you'd have to ask yourself why CitiBank and Jamie Dimon lobbied so hard to make sure that they could still play risky derivative bets on products that might be backed by federal guarantees.


I say the deal is bankers trying to hedge their bet and if a derivative goes bad they simply find it nice to have the taxpayers pick up the tab now and again.
After all what banker can stand a loss on anything......another scam that politicians have allowed.....

Yup, politicians allowed it... mostly, YOUR politicians. Get over it.

Sky Blue
12-23-2014, 05:04 PM
If you don't recognize that the overwhelming majority of support for this came from the right

No, that's not precisely true. The majority support came from the center-right, not the right (as represented by the Tea Party, which long opposed the bailouts), but the center-left was not complaining too loudly (and in some cases, including that of Mr. Obama himself, Democrats supported the bill without question).

It is true that more Democrats than Republicans voted against the bill, but in view of a looming shutdown, Democrats get no points for a principled stand against the bill in view of the political hay made on the shutdown the last time around. Indeed, the bill passed a Democratic-controlled Senate in any event. Not exactly the picture of a principled stand on this issue by Democrats.

On this issue, the moderates in both parties continue to be perfectly happy to stay hand-in-glove with the big banks, and tagging RonW with the sins of establishment Republicans (whom he opposes, especially on this issue), misses the mark.

RonW
12-23-2014, 05:04 PM
I think this was explained in a book called "The Best Way to Rob a Bank is to Own One."

The general gist being that the laws may not be sufficient to stop this type of behavior.

No, I'm not going to try to explain it to you. I doubt you could understand it, and even if you could, it wouldn't make a dent anyway.

You never seem to notice or care when people explain stuff to you.

========================================

It's not true to say that nothing has been done. Google LIBOR... and maybe the Chase mortgage settlement, among others.

I knew about libor, probably before you were born or hatched.....save the snotty remarks, I'm not impressed ....you are just making yourself look childish..

RonW
12-23-2014, 05:08 PM
Norm -
I don't know what you're talking about, but based on the rest of this thread, it's not clear that you do, either. If you're referring to the right wing myth of complicity by Fannie Mae and Freddie Mac, you'd be wrong... that canard was debunked ages ago. They were late to the party, before the collapse, and had only a very small fraction of junk loans in their portfolio when the end came. The vast bulk of the problem was with commercial banks.

Oh no, not the community reinvestment act that the dems pushed through............kinda a sore scab, ain't it...

Norman Bernstein
12-23-2014, 05:09 PM
No, that's not precisely true. The majority support came from the center-right, not the right (as represented by the Tea Party, which long opposed the bailouts), but the center-left was not complaining too loudly (and in some cases, including that of Mr. Obama himself, Democrats supported the bill without question).

It is true that more Democrats than Republicans voted against the bill, but in view of a looming shutdown, Democrats get no points for a principled stand against the bill in view of the political hay made on the shutdown the last time around. Indeed, the bill passed a Democratic-controlled Senate in any event. Not exactly the picture of a principled stand on this issue by Democrats.

On this issue, the moderates in both parties continue to be perfectly happy to stay hand-in-glove with the big banks, and tagging RonW with the sins of establishment Republicans (whom he opposes, especially on this issue), misses the mark.

Nice try, but I don't think this softens the blow at all. Forgetting the descriptions of political alignment, the specific provision in the bill exposing the taxpayers to risk was a Republican initiative, not a Democratic one. The 'center right', if you insist, has been steadfast in its belief that all would be butterflies and roses if only we weakened the already weak regulation of the financial markets. NOW, they want to do something even dumber: compel the CBO to use 'dynamic scoring', which is a euphemism for telling the CBO to presume the already-debunked myths about tax cuts stimulating the economy.

Can't wait to debate THAT one (but I'm off to dinner...)

ljb5
12-23-2014, 05:13 PM
I knew about libor...

Well, if you knew about LIBOR, you probably knew about the LIBOR Scandal... and probably know about the investigations, settlements, criminal and legal proceedings... etc...


But, for a minute there, it seemed like you knew nothing of them.

xflow7
12-23-2014, 05:13 PM
I believe the theory is that the laws of large numbers and probability change gambling to insurance. If we all show up at our local hosptials tomorrow, our insurers will fail. Why do you think that is any different than the CDS situation?

That (flawed) line of reasoning was exactly what the ratings agencies used to state that the CDS's were investment grade. The CDS's were issued against mortgage-backed securities that were basically amalgamations of a whole bunch of high-risk loans. The ratings agencies said, "Well, the probability that any individual loan will go bad may be high, but the probability that many of them will go bad at the same time is low, therefore the risk of the overall portfolio is low." The flaw is that their logic is only sound if you assume that the point in time at which the loans go bad are uncorrelated.

But they completely ignored the fact that many of the loans were originated during a narrow time frame, so they were of similar ages. Plus many of them were adjustable-rate that had low initial interest rates of 2-3% that would reset after 3-5 years to some margin over a reference - i.e. much higher. And obviously, the most likely time for an adjustable rate loan to fail is when it suddenly jumps from 2% to 8% interest.

So, you had a large fraction of the loans in the underlying securities all dramatically increasing in risk at more or less the same time (because they'd all been originated around the same time, with similar terms). So, boom, the assumption that their failures would be uncorrelated is out the window, and we've seen the results.

Now, that is all separate from the fact that many of the loan failures were over-leveraged by CDS's being issued to non-interested parties. So, in your hospital example, it's not just that a bunch of people show up at the hospital at the same time, but all their friends and neighbors decide to file claims for payment of hospital bills too, even though they weren't sick.

Gambling.

Dave

Norman Bernstein
12-23-2014, 08:00 PM
Oh no, not the community reinvestment act that the dems pushed through............kinda a sore scab, ain't it...

*laughs*

The right wing rant about the Community Reinvestment Act, and the conservative myth about it, has been thoroughly debunked for YEARS now.....

...but I see that myths die VERY hard, and you've been sucked in by it.

Amazing! :)