Derivatives for Dummies (Full Version)

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DedicatedDom40 -> Derivatives for Dummies (10/8/2009 6:06:01 PM)

I guess the reason people initially blamed Obama, Bush, or the deadbeat homeowner who bought too much house for all our financial troubles was because it kept our attention away from the betting parlor in the back room.

http://www.cbsnews.com/video/watch/?id=5274961n

Has there been a single tea party held on Wall St yet?



rulemylife -> RE: Derivatives for Dummies (10/8/2009 7:09:20 PM)

It's interesting to note that the deregulation arguments that got us into this are now being used by the same people to claim that increased regulation would exacerbate the problems. 



DemandingLeader -> RE: Derivatives for Dummies (10/8/2009 7:53:43 PM)

And to think the bulk of the $180 billion from the taxpayer that was given to AIG has been used to fund the gambling winnings payable to people who live in foreign countries, people who came across the ocean and plunked down a bet against us.  Your tax money is going out of the country as winnings for legal bets placed by foreigners who were betting against our economy. That blows my mind. Why isn't the vast majority of this country pissed off over who caused and benefitted from this? Why aren't hedge fund managers being burned in effigy?



MzMia -> RE: Derivatives for Dummies (10/8/2009 8:11:14 PM)

A year after the "bail outs", many are wondering if they are working.
I feel like some of the "bail outs" have certainly worked, and some have
worked well for mainly those that received them.
[;)]

I found this graph that I think is wonderful and worth peeking at.
 
One year later: Have the bailouts worked? - CNNMoney.com

The bail out tracker is also worth looking at.
I do feel that if we had not had some of the bailouts, many people would be standing
in soup lines and living in tent city.
 
Follow the money: Bailout tracker - CNNMoney.com



dcnovice -> RE: Derivatives for Dummies (10/8/2009 8:12:38 PM)

quote:

A year after the "bail outs", many are wondering if they are working.


Well, has the banking system collapsed?



MzMia -> RE: Derivatives for Dummies (10/8/2009 8:20:29 PM)

quote:

ORIGINAL: dcnovice

quote:

A year after the "bail outs", many are wondering if they are working.


Well, has the banking system collapsed?


No, the larger banks are doing well, very well indeed.
They are some of "winners" of the bailouts, we taxpayers
kept them afloat and flushed with cash!



rulemylife -> RE: Derivatives for Dummies (10/8/2009 8:29:36 PM)

The last figure I saw was 95 banks had failed since the beginning of the the year.

Can you imagine the number without the bailout?



MarcEsadrian -> RE: Derivatives for Dummies (10/8/2009 8:29:56 PM)


quote:

ORIGINAL: dcnovice

quote:

A year after the "bail outs", many are wondering if they are working.


Well, has the banking system collapsed?



The larger banks are doing well, but the smaller, local banks are on their own and in definite peril with unemployment rising. I don't question the effectiveness of bailout funding; I just question the logic of how and where monies are appropriated. Large financial institutions benefit from a support structure provided by the taxpayers, but small organizations which employ the taxpayers themselves are left to fend for themselves in a very cold and precarious form of Russian Roulette Capitalism.



DedicatedDom40 -> RE: Derivatives for Dummies (10/9/2009 11:35:10 AM)

The legislation that enabled the gambling was attempted repeatedly, failing each time, until it was embedded in an appropriations bill

http://www.govtrack.us/congress/bill.xpd?bill=h106-4577


When it was attempted on its own, it passed the house, never made it through the senate.

http://www.govtrack.us/congress/bill.xpd?bill=h106-4541


Only four house reps voted no, all others voted for it.  One of those four that voted against it was Ron Paul. Interesting to see Mr. Libertarian voting against a deregulation opportunity. But maybe he saw something the rest didn't.

http://www.govtrack.us/congress/vote.xpd?vote=h2000-540



Moonhead -> RE: Derivatives for Dummies (10/9/2009 11:39:23 AM)

This'll have been posted already, but it's a good one:
[image]http://mcsearcher.files.wordpress.com/2008/09/jump-you-fers.jpg[/image]



Fellow -> RE: Derivatives for Dummies (10/9/2009 1:05:23 PM)

I think big banks did not fail but Obama failed. When he took office he should have showed the financial oligarchy there is a new Boss in town. Major bank would have gone through bankruptcy proceedings by now, debt would have been written off and economy would have got a new start. Now the banks are still sitting on dead assets that do not perform, can not be sold, and they pretend the assets are worth much more than market would pay for them. The government still has a chance. If they stop ignoring mark to market rule and just follow the law they can break up BA, City and some others. US financial services industry has about 30% excess capacity that needs to be eliminated.



rulemylife -> RE: Derivatives for Dummies (10/9/2009 3:17:51 PM)

quote:

ORIGINAL: Fellow

I think big banks did not fail but Obama failed. When he took office he should have showed the financial oligarchy there is a new Boss in town. Major bank would have gone through bankruptcy proceedings by now, debt would have been written off and economy would have got a new start.


And here I thought the bank bailout was proposed and passed under Bush.

Which is what I love about these boards, I learn fascinating new facts every day.



DedicatedDom40 -> RE: Derivatives for Dummies (10/9/2009 3:26:56 PM)

quote:

When he took office he should have showed the financial oligarchy there is a new Boss in town.



Hard to do that when you are on their payroll.

Besides, I truly believe our present financial structure was set up by the banking elite so it HAD to be bailed out. They have the gold, we have paper thats backed by a promise. Allowing banks to fail would have damaged us more than them.

Half the country is out planning a coup, and the other half is plotting a defense against a coup, and the banking elite are laughing their asses off at all the silly 'little folk' in America.

I always said Ron Paul was the right man at the wrong time. He isn't the guy you want managing the ship S.S. Welfare State, but rather you want him in charge of the rebuilding after the S.S. Welfare State sinks from its own weight or is torpedoed in the harbor by the banking elite. Who would have thought events would accelerate the timetable to where Ron Paul may be relevant before he dies of old age.




tazzygirl -> RE: Derivatives for Dummies (10/9/2009 3:32:37 PM)

Amazing how we get those pesky facts all mixed up.




Politesub53 -> RE: Derivatives for Dummies (10/9/2009 3:36:12 PM)

quote:

ORIGINAL: DemandingLeader

And to think the bulk of the $180 billion from the taxpayer that was given to AIG has been used to fund the gambling winnings payable to people who live in foreign countries, people who came across the ocean and plunked down a bet against us.  Your tax money is going out of the country as winnings for legal bets placed by foreigners who were betting against our economy. That blows my mind. Why isn't the vast majority of this country pissed off over who caused and benefitted from this? Why aren't hedge fund managers being burned in effigy?


Utter nonsense yet again. Blame people from overseas, thats the easy thing to do. The money that bailed out AIG, did just that. It didnt bail out all the banks overseas that had invested in America. The problem was bankers were dealing with financial instruments they didnt understand. They kept making more unsecured loans, which in turn swelled the books, they used the profits to make more loans. Lehman Bros ( I think it was them ) announced record profits in the same year they went belly up, go figure !

Anyone who thinks the bailouts were not needed fails to understand how bad the situation was. Americas banks had less than a day or two of capital in reserve, no bail outs and what you see now would have been chickenfeed. The whole system would have failed, anyone who thinks otherwise is delusional.





einstien5201 -> RE: Derivatives for Dummies (10/9/2009 4:40:58 PM)


quote:

ORIGINAL: rulemylife

The last figure I saw was 95 banks had failed since the beginning of the the year.

Can you imagine the number without the bailout?



It occurs to me that every bank in the country could fail and it wouldn't directly affect me. The FDIC already insures quite a bit of money in the case of bank failure. I can't recall if it's 100k or 250k (I think it changed recently), but in either case it's far more than I, or the majority of American individuals, have in liquid assets. Don't get me wrong, I'm not saying that there would be no effect. It's just that my initial impression is that the effect would be limited to businesses and individuals with very large amounts of liquid assets. To be frank, if someone has more money than the amount insured by the FDIC, they probably shouldn't be putting it all in one place. Eggs in a basket and all that.



Politesub53 -> RE: Derivatives for Dummies (10/9/2009 4:53:07 PM)

Einstien, so what about companies that employ you, when they cant get credit to operate. What about companies that insure you, for health and motoring purposes. What about companies you rely on for one thing or another that go belly up. A total failure would have been exactly that, the whole economy grinding to a halt.



popeye1250 -> RE: Derivatives for Dummies (10/9/2009 4:57:16 PM)

It's the FDIC's job to protect "depositors" not banks.
If banks get in trouble their stockholders should take the hit not the Taxpayers!
No Taxpayer money should be used to bailout a private or public (stock) business.
Just let the bad banks go out of business and new banks will step in to fill the void.
I think in the old days they called that "Capitalism."



Politesub53 -> RE: Derivatives for Dummies (10/9/2009 5:03:50 PM)

quote:

ORIGINAL: popeye1250

It's the FDIC's job to protect "depositors" not banks.
If banks get in trouble their stockholders should take the hit not the Taxpayers!
No Taxpayer money should be used to bailout a private or public (stock) business.
Just let the bad banks go out of business and new banks will step in to fill the void.
I think in the old days they called that "Capitalism."


Popeye here is a question that i keep asking an no one answers.

If you are against the bailouts, would you feel the same if all banks failed and you lost everything ?



UncleNasty -> RE: Derivatives for Dummies (10/9/2009 5:07:32 PM)

There were a couple of major casues of the "crash" but I think ultimately it comes down to this:

The big players on wall street went after there own in the case of both Bear Stearns and Lehman Bros. Tactics employed had frequently been used in the past 40 years to go after smaller players, and these tactics had become more available in the past 40 years - with additional relaxing of regulations, with less regulation enforcement, etc.

A look at the short selling, naked short selling, failed trades and the rumors that surrounding the failure of both of those Banks looks as if it was simply a case of the others ganging up on them.

Bloomberg, through an FOIA request, turned up records of a meeting between ALL of the big banks and the Fed, with the one exception being Bear Sterns, a week or ten days before Bear went under. Inclusion of that document was accidental I'm sure. None of the CEO's, nor Paulson, nor Bernanke, nor Geithner (who at the time was head of the NY Fed) have been willing to comment on the meeting.

I forget the fellows name, but I think it was the CEO of Overstock.com, has been trying to make noises about market manipulations in exactly this way for several years now.

I guess I'm trying to connect some dots of information I've come across in the past 22 months while researching the mortgage and housing crisis. Derivatives, bailouts, etc., have not the primary focus of my research so I'm a little out of my depth.

One thing is clear to me though: Goldman Sachs is at the top of the heap in banking now. And Obama has made many appointments of former Goldman folks. A look at who got money from the TARP fund while Paulson (former Treasury Sec. and Goldman guy) and Geithner (former Goldman guy and in charge of TARP, now Treasury Sec.) is a pretty strong argument.

Uncle Nasty



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