I was amazed to hear about this particular practice on "Marketplace" two days ago. The mortgage crisis isn't so much a danger as is the shadowy under-the-counter financial market that few people know of. By way of comparison, when the Bear-Stearns buyout by JP Morgan occured, it brought to light just how large this segment of our economy is-- the stock market operates around 21 trillion dollars, while the credit default swap market is 43 trillion dollars.
Worse, most people-- even the economists and bankers who play this market --don't really know how it works. It's like this enormous casino.
Interesting stuff.
Totem
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Worse, most people-- even the economists and bankers who play this market --don't really know how it works. It's like this enormous casino.
It's extremely complex. Most people don't have the math to understand it. I recall pointing this out a week ago or so. People don't want to hear that something can't be simplified enough for them to understand, though, so the narrative will be that banks made bad loans because it's much easier to explain.
Disclaimer:
To make a long story short, I don't take any responsibility for anything I post here. It's not news, it's not truth, it's not serious. It's parody. It's satire. It's bitter. It's angsty. Your mother's a *****. You like to jack off dogs. That's right, you heard me. You like to grab that dog by the bone and rub it like a ski pole. Your dad? Gay. Your priest? Straight. **** off and let me post. It's not true, it's all in good fun. Now go away.
To make a long story short, I don't take any responsibility for anything I post here. It's not news, it's not truth, it's not serious. It's parody. It's satire. It's bitter. It's angsty. Your mother's a *****. You like to jack off dogs. That's right, you heard me. You like to grab that dog by the bone and rub it like a ski pole. Your dad? Gay. Your priest? Straight. **** off and let me post. It's not true, it's all in good fun. Now go away.
Heh, I can see by the overwhelming and massive post avalanch that this is a topic of intense interest. The two of us are the only ones who apparently find this remarkable.
A week ago I highly doubt anyone would have known anything about DCS-- not that much more is known by the public today --and yet the revelation that there is an entirely unregulated and monitored financial arena that is double the size of Wall Street, and moreover is on very shaky ground doesn't seem to faze anyone. Amazing.
For those of you just tuning in, Bear-Stearns, a venerable and supposedly stable old banking institution, was bought out by JP Morgan due to financial distress. B-S had covered their posssible losses from the mortgage crisis by "swapping" potentially massive defaultable mortgages sold to credit institutions for other's similarly risky loans. These credit swaps were supposed to spread risk across the entire money spectrum, thus reducing the chance that bank failures could happen. As JP Morgan's purchase of Bear-Stearns showed, this isn't what happened. The result is that when the bottom fell out, B-S was found to be holding the bag for billions of dollars of losses-- unbeknownst to shareholders, the public, and the financial markets. The ramifications of this are that no one knows which other financial behemoths are also involved or leveraged to the hilt by these default credit swaps. And due to the size of this shadow market, it has the very real potential to completely devastate the world's economy, making the 1930s look like a mere hiccup in the markets.
And as Smash said, so little is known or understood about this, even by those who are playing this market, we don't know if we are resting on what amounts to surface tension on a financial bubble that is in the process of popping.
Scary stuff. Or not. The truth is, nobody knows. The only thing we do know is that a banking institution failed when there were no sign of it happening prior to a competitor bailing them out.
Totem
Totem
Edited, Apr 3rd 2008 10:45pm by Totem
A week ago I highly doubt anyone would have known anything about DCS-- not that much more is known by the public today --and yet the revelation that there is an entirely unregulated and monitored financial arena that is double the size of Wall Street, and moreover is on very shaky ground doesn't seem to faze anyone. Amazing.
For those of you just tuning in, Bear-Stearns, a venerable and supposedly stable old banking institution, was bought out by JP Morgan due to financial distress. B-S had covered their posssible losses from the mortgage crisis by "swapping" potentially massive defaultable mortgages sold to credit institutions for other's similarly risky loans. These credit swaps were supposed to spread risk across the entire money spectrum, thus reducing the chance that bank failures could happen. As JP Morgan's purchase of Bear-Stearns showed, this isn't what happened. The result is that when the bottom fell out, B-S was found to be holding the bag for billions of dollars of losses-- unbeknownst to shareholders, the public, and the financial markets. The ramifications of this are that no one knows which other financial behemoths are also involved or leveraged to the hilt by these default credit swaps. And due to the size of this shadow market, it has the very real potential to completely devastate the world's economy, making the 1930s look like a mere hiccup in the markets.
And as Smash said, so little is known or understood about this, even by those who are playing this market, we don't know if we are resting on what amounts to surface tension on a financial bubble that is in the process of popping.
Scary stuff. Or not. The truth is, nobody knows. The only thing we do know is that a banking institution failed when there were no sign of it happening prior to a competitor bailing them out.
Totem
Totem
Edited, Apr 3rd 2008 10:45pm by Totem
They all sneaky gave the really bad ones to B-S to cover their asses.
Honestly, that's what they give for selling houses to people like me. ($17K debt in student loans I nearly defaulted. I only crawled out of another $13K in credit card debt just last year!)
Honestly, that's what they give for selling houses to people like me. ($17K debt in student loans I nearly defaulted. I only crawled out of another $13K in credit card debt just last year!)
Scary stuff. Or not. The truth is, nobody knows. The only thing we do know is that a banking institution failed when there were no sign of it happening prior to a competitor bailing them out.
whats really scary is someone(small group of someones...) did know and did nothing about it, or this was a best case scenario to protect the flow of the unregulated cash.
sorry i really have no clue what im talking about, i just do not trust big business and that includes banks to do the right thing, unless the right thing is to rape its customers and make massive amounts of profit in as short a term as possible.
whats really scary is someone(small group of someones...) did know and did nothing about it, or this was a best case scenario to protect the flow of the unregulated cash.
sorry i really have no clue what im talking about, i just do not trust big business and that includes banks to do the right thing, unless the right thing is to rape its customers and make massive amounts of profit in as short a term as possible.
Your DRM sig link is dead, btw, Singdall
Do what now?
Not only is it huge now, it's huge recently. 43 Trillion is up about 50% from Q4 2006, and it had already doubled from the year before. The growth seems to have nearly stopped around its current amount, but yeah this hit fast.
I think this subject is fascinating. We have an economic and regulatory system in place that was designed to not only allow, but also encourage that kind of behaviour. To allow mathematicians to construct models that weren't even properly understood by the people using them. To allow bankers and hedge-funds to play the system under a scheme where they had 0 chance to lose. And a lot of that game was either specualtive, in that it didn't create any wealth for anyone except themselves, or exploitative, whereby they screwed up gullible and vulnerable people.
And the worst was that none of this was a coincidence. The system was put in place knowing full well this was going on, it was even encouraged. When anyone complained about it, they were called a communist. Eventhough these guys that basically played the system without being able to lose took home gigantic bonuses either, running in the millions of dollars. Each.
And what's almost fUcking worse in all of this, is that these guys paid virtually 0 taxes.
I think that's what makes me the most sick in this story, eventhough its a bit off-topic. I don't know how it is in the US, but in the UK, the tabloids and the right-wing commentators are always going on about "benefit scroungers" and "asylum-seekers scroungers", basically all the people that get some form of benefits/welfare, eventhough they might not be entitled to it. It's a constant cause for self-righteous indignation and moralising about the evils of welfare. In The Sun, for exemple, they have an article called "Benefit Street" where they take some run-down street in some depressingly drab suburb, and wag their finger all the people living there claiming benefits.
These guys costs the UK economy £500m a year. Tax evasion costs the
UK economy a over a billion a year. And yet, you never see a picture of a street in Mayfair called "tax dodging street" with its inhabitants named and shamed. Because it is so much more easy to pick on people surviving on £50 a week and claiming another tenner, rather than someone on £100,000/year trying to greed up another 10k through tax evasion.
And the worst was that none of this was a coincidence. The system was put in place knowing full well this was going on, it was even encouraged. When anyone complained about it, they were called a communist. Eventhough these guys that basically played the system without being able to lose took home gigantic bonuses either, running in the millions of dollars. Each.
And what's almost fUcking worse in all of this, is that these guys paid virtually 0 taxes.
I think that's what makes me the most sick in this story, eventhough its a bit off-topic. I don't know how it is in the US, but in the UK, the tabloids and the right-wing commentators are always going on about "benefit scroungers" and "asylum-seekers scroungers", basically all the people that get some form of benefits/welfare, eventhough they might not be entitled to it. It's a constant cause for self-righteous indignation and moralising about the evils of welfare. In The Sun, for exemple, they have an article called "Benefit Street" where they take some run-down street in some depressingly drab suburb, and wag their finger all the people living there claiming benefits.
These guys costs the UK economy £500m a year. Tax evasion costs the
UK economy a over a billion a year. And yet, you never see a picture of a street in Mayfair called "tax dodging street" with its inhabitants named and shamed. Because it is so much more easy to pick on people surviving on £50 a week and claiming another tenner, rather than someone on £100,000/year trying to greed up another 10k through tax evasion.
Quote:
These guys costs the UK economy £500m a year. Tax evasion costs the
UK economy a over a billion a year. And yet, you never see a picture of a street in Mayfair called "tax dodging street" with its inhabitants named and shamed. Because it is so much more easy to pick on people surviving on £50 a week and claiming another tenner, rather than someone on £100,000/year trying to greed up another 10k through tax evasion.
UK economy a over a billion a year. And yet, you never see a picture of a street in Mayfair called "tax dodging street" with its inhabitants named and shamed. Because it is so much more easy to pick on people surviving on £50 a week and claiming another tenner, rather than someone on £100,000/year trying to greed up another 10k through tax evasion.
This is why i hate the press so very very much.
I have to point out though Red the people that the Sun are getting at are not on £50 per week.
Baron von tarv wrote:
I have to point out though Red the people that the Sun are getting at are not on £50 per week.
I agree with what you said before about why they are targeted.
But unemployment benefits are £46/week. I haven't researched how much disablity benefits are, nor housing/kids ones, butcheck where and how these people live. It's not freaking luxury. They live in a ******** of a town, in the ********* street where the council can send them, live in crappy conditions, and yet, somehow, we're supposed to feel jalous, or angry, I dont know, that some people with awfully ****** lives are getting some money from the government?
I dont know, that some people with awfully sh*tty lives are getting some money from the government?
That's because you're a dirty French Socialist. I imagine it's crazily confusing to you why there aren't nationwide strikes every summer, too.
Disclaimer:
To make a long story short, I don't take any responsibility for anything I post here. It's not news, it's not truth, it's not serious. It's parody. It's satire. It's bitter. It's angsty. Your mother's a *****. You like to jack off dogs. That's right, you heard me. You like to grab that dog by the bone and rub it like a ski pole. Your dad? Gay. Your priest? Straight. **** off and let me post. It's not true, it's all in good fun. Now go away.
To make a long story short, I don't take any responsibility for anything I post here. It's not news, it's not truth, it's not serious. It's parody. It's satire. It's bitter. It's angsty. Your mother's a *****. You like to jack off dogs. That's right, you heard me. You like to grab that dog by the bone and rub it like a ski pole. Your dad? Gay. Your priest? Straight. **** off and let me post. It's not true, it's all in good fun. Now go away.
Smasharoo wrote:
That's because you're a dirty French Socialist. I imagine it's crazily confusing to you why there aren't nationwide strikes every summer, too.
That, and nudist beaches.
Bloody capitalists
Quote:
But unemployment benefits are £46/week. I haven't researched how much disablity benefits are, nor housing/kids ones, butcheck where and how these people live. It's not freaking luxury. They live in a sh*thole of a town, in the sh*ttiest street where the council can send them, live in crappy conditions, and yet, somehow, we're supposed to feel jalous, or angry, I dont know, that some people with awfully sh*tty lives are getting some money from the government?
I had £160 per month dole, No council Tax (£90 a month) No Rent (£300 per month) No travel expences going to work(£60 per month) No Tax/Nat insurance.(25% of wage.)
In my case i was earning about £800 a month working for Barcleycard so take off £200 for Tax/Ins £300 for rent, £90 Council Tax, £60 for travel that left me £150 a month, I got Laid off and my standard of living improved...
Argue all you like that minimum wage is too low but when you are more able to go out an buy CD's and trivial stuff like that when you are not working something is wrong.
Baron von tarv wrote:
Argue all you like that minimum wage is too low but when you are more able to go out an buy CD's and trivial stuff like that when you are not working something is wrong.
£160 a month and you can still buy CD's? I don't think I could feed myself on that, it's less than a fiver a day. In london, that barely gets you a sandwich. And anyway, the longer you are the dole, the more your standard of living fades.
I do agree that you should make more on the minimum wage than when you're on the dole, but on the whole people generally do.
And even then, I think that's less "wrong" than having some guys whose only activity is to use other people's money to speculate and make more money, making millions every year, and not paying a penny of income tax. Who's teh real parasite?
It's like this non-dom thing. They wanna charge £30k for foreigners who pay don't pay taxes in Britain but live here. Now, i agree they didn't really plan the catchment requirements properly, but the hoop-la caused by the story was completely disproportionate. Newspapers were talking about how it would make the whole of the UK crumble, and would kill the City, etc... Well, if the UK's economy is reliant on people not domiciled here, who don't pay taxes, and take all the profits they make back home, we're in much deeper **** than we thought.
I'm not saying there isn't some wrong on both extremes of the wealth scale, just that the debate is completely disproprotionally one-sided.
Quote:
£160 a month and you can still buy CD's? I don't think I could feed myself on that, it's less than a fiver a day. In london, that barely gets you a sandwich.
The rest of your post i totally agree with.
Baron von tarv wrote:
Sure you would be shopping at Aldi but you wouldn't starve.
And how could you when this delicious and nutricious breakfast in a can costs only £1.75!
I agree, you might not starve, but you'll eat **** and die young. Also, on benefits and not buying booze and ****? That's some amateurish unemployement...
Alla's an Amazing place, it's one of the few places i can argue with people i agree with, what fun!
The thing is, if the market falls any more severely, London will suffer the most. Their stock-in-trade is their status as the center of the financial universe.
Totem
Totem
Baron von tarv wrote:
Alla's an Amazing place, it's one of the few places i can argue with people i agree with, what fun!
Ney fockin waey ya daft cont, i'm gonne coll Anna if yoos carry on loike.
Totem wrote:
The thing is, if the market falls any more severely, London will suffer the most. Their stock-in-trade is their status as the center of the financial universe.
I'm not so sure. It's at the centre of the financial universe because we have an incredibly lax tax regime and regulatory bodies. None of that will change, even if the markets crash some more. And a lot of wealth in London today comes from Russians, Chinese, and people from the ME. I'm not saying they're immune to the recent collapse, but they're slightly more sheltered from it. So eventhough the level of activity will go down, I don't think its place as an a financial centre is threatened by the crisis itself.
Well, it all depends how far they crash, of course.
NPR has a pretty good interview with economist Michael Greenberger, attempting to explain the mess in layman's terms. LISTEN
Haha, one of Greenbergers comments; "we would have been better off having Vegas manage these bets [credit default swaps] than Bear Stearns".
Pretty interesting.
Haha, one of Greenbergers comments; "we would have been better off having Vegas manage these bets [credit default swaps] than Bear Stearns".
Pretty interesting.
Alma wrote:
I lost my post
NPR has a pretty good interview with economist Michael Greenberger, attempting to explain the mess in layman's terms.
Yeah, it's not possible. There are no "laymen's terms" for the functioning of complex mathmatical structures. People just want to feel as if they understand, but they can't without understanding higher level math.
Why is so hard for people to just accept that they're incapable of understanding? I don't go around asking women to tell me what menstruation is like. I'm perfectly ok knowing I'm not capable of ever understanding what it feels like.
Disclaimer:
To make a long story short, I don't take any responsibility for anything I post here. It's not news, it's not truth, it's not serious. It's parody. It's satire. It's bitter. It's angsty. Your mother's a *****. You like to jack off dogs. That's right, you heard me. You like to grab that dog by the bone and rub it like a ski pole. Your dad? Gay. Your priest? Straight. **** off and let me post. It's not true, it's all in good fun. Now go away.
To make a long story short, I don't take any responsibility for anything I post here. It's not news, it's not truth, it's not serious. It's parody. It's satire. It's bitter. It's angsty. Your mother's a *****. You like to jack off dogs. That's right, you heard me. You like to grab that dog by the bone and rub it like a ski pole. Your dad? Gay. Your priest? Straight. **** off and let me post. It's not true, it's all in good fun. Now go away.
Smasharoo wrote:
NPR has a pretty good interview with economist Michael Greenberger, attempting to explain the mess in layman's terms.
Yeah, it's not possible. There are no "laymen's terms" for the functioning of complex mathmatical structures. People just want to feel as if they understand, but they can't without understanding higher level math.
Why is so hard for people to just accept that they're incapable of understanding? I don't go around asking women to tell me what menstruation is like. I'm perfectly ok knowing I'm not capable of ever understanding what it feels like.
Did you even listen to the interview?
Alma wrote:
I lost my post
Why should we settle for ignorance?
Because you're settling for worse than ignorance, you're settling for an explanation that's patronizing and wrong instead of the honest reality that you can't understand it.
Did you even listen to the interview?
Yes. It was listening to someone explain death to a 2 year old.
Disclaimer:
To make a long story short, I don't take any responsibility for anything I post here. It's not news, it's not truth, it's not serious. It's parody. It's satire. It's bitter. It's angsty. Your mother's a *****. You like to jack off dogs. That's right, you heard me. You like to grab that dog by the bone and rub it like a ski pole. Your dad? Gay. Your priest? Straight. **** off and let me post. It's not true, it's all in good fun. Now go away.
To make a long story short, I don't take any responsibility for anything I post here. It's not news, it's not truth, it's not serious. It's parody. It's satire. It's bitter. It's angsty. Your mother's a *****. You like to jack off dogs. That's right, you heard me. You like to grab that dog by the bone and rub it like a ski pole. Your dad? Gay. Your priest? Straight. **** off and let me post. It's not true, it's all in good fun. Now go away.
Anything can be explained in laymen's terms. This is no exception. You don't need to know higher level math to understand the concept.
Quote:
Because you're settling for worse than ignorance, you're settling for an explanation that's patronizing and wrong instead of the honest reality that you can't understand it.
At least if i understand the concept i am aware enough to make a judgement as to a way ahead.
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