October 04, 2008

Credit Default Swaps (CDS) Evolving Financial Meltdown and Derivative Disaster Du Jour

By Ellen Brown

When the smartest guys in the room designed their credit default swaps, they forgot to ask one thing - what if the parties on the other side of the bet don't have the money to pay up? Credit default swaps (CDS) are insurance-like contracts that are sold as protection against default on loans, but CDS are not ordinary insurance.

Insurance companies are regulated by the government, with reserve requirements, statutory limits, and examiners routinely showing up to check the books to make sure the money is there to cover potential claims. CDS are private bets, and the Federal Reserve from the time of Alan Greenspan has insisted that regulators keep hands off.

The sacrosanct free market would supposedly regulate itself. The problem with that approach is that regulations are just rules. If there are no rules, the players can cheat; and cheat they have, with a gambler's addiction. In December 2007, the Bank for International Settlements reported derivative trades tallying in at $681 trillion - ten times the gross domestic product of all the countries in the world combined. Somebody is obviously bluffing about the money being brought to the game, and that realization has made for some very jittery markets.---------------- More

3 comments:

Anonymous said...

http://www.givemeliberty.org/
(many ideas and videos we the people)

http://www.WeThePeopleCongress.org/blog.


In 1999 (last time DOW was 10000) we were $24.6T in debt and going deeper (buying shoes with credit cards etc.) and it was that being in debt and going deeper in debt that fueled the "expansion" which turned out to be a mirage and left us where we are.

Well right now we are $51 T in debt.
- If, when the "recovery" takes hold we return to buying shoes at the previous rates we will end up right back here all over again.

http://forums.hannity.com/newreply.php?do=newreply&p=62612021 (blog to post on)

Anonymous said...

"Educate and inform the whole mass of the people... They are the only sure reliance for the preservation of our liberty."Thomas Jefferson



"Democracy is dead ... lobbyists rule America"
http://www.marketwatch.com/story/16-credos-for-our-new-lobbyist-nation-2009-09-01?pagenumber=
(THIS IS A MUST READ, YOU WILL BE SHOCKED!)

"Yes, folks, democracy is dead. Oh, the illusion will be kept alive in our history books, in the rhetoric of politicians, in the manipulated minds of America's 95 million Main Street investors."

#here a few clips:


Lobbyists are the new "unseen hand" of American Capitalism. Capitalism's new "unseen hand" is the enlightened deals of 42,000 lobbyists
#

Lobbyists will guide economic recovery for special interests. Congress, the president and regulators all have a price, FIND IT AND PAY IT!
#

Lobbyists protect special interests using taxpayer money. The wealthy will have ready access to the assets and credits of the Treasury.


http://www.marketwatch.com/story/16-credos-for-our-new-lobbyist-nation-2009-09-01?pagenumber=2

Politicians now enjoy a lifetime job with regular raises and great benefits. The only way we can expect to create new JOBS is to UN-ELECT and push for TERM LIMITS for the "DEADWOOD" Senators and Representatives. Some of the "INCUMBENTS" have been in office for 20, 30 and even 40 years. We all appreciate their service but, the "good old boys bipartisan network" no longer works. Why not insist on 1. more candidate choices and 2. fresh new innovative ideas? If you join the "swing voters coalation" and register Independent (Indies) we can cast a long shadow over the two party system to break the bipartisan stranglehold. The biggest fears politicians have are 1. not being re-elected 2. term limits 3. tax revolts and 4. loss of power. The best way to break the State and Federal. Democratic (Dems) party and the Republicain (Reps) party stranglehold is to register Independent (Indies). When you register Indie you do not need to change your political views, be they liberal or conservative. Why not vote for one Dems and one Reps Senator to balance out the Senate and level the playing field? Bi-partisian politics no longer works. It doesn't matter if the Dems have the majority or the Reps. The results are the same. Heads they win, tails we lose...

Ok, so what do we do after regestering Indie? Write, call or email your Senators and Representives. Tell them you have regestered Indie because you no longer trust the government machine. Politicians keep a very close eye on the number of Dems, Reps or Indies in their district. If they see a huge number of NEW regestered Indies, you can be sure we are weakening their stranglehold.


“Of all the reforms the freshmen wanted to bring to Washington, I believed setting
term limits was by far the most important. Nothing would change the culture, the
policies, more than replacing career politicians with citizen legislators. Political careerism
more than anything else had separated Washington from the people. Careerism perpetuated big government
and was a constant corrupting force in the system.”
—Oklahoma’s Sen. Dr. Tom Coburn
in his book, Breach of Trust

stay well,

greycloud

Daryl L. Hunter said...

Thanks guys for the info, links and thanks for visiting.