the clue "maverick finance" - taking chances.

Cool article.

Benjamin Graham is rolling over in his grave.

These nonsense derivative positions aren't done unraveling yet either. Gonna be a cold winter.

Why the hell can we not prosecute anybody in this country anymore? if you have money you don't go to jail.

these financial people are criminals.

the biggest trick the gov't and banks pulled over the americans eyes was making them think they were just incompetent and dumb.

they are all gonna walk away rich and happy as soon as they can extract themselves because they've already made their money.

the shareholders were fucked, just like enron, but there's no investigation, the bankers, knowing what was coming started extracting money in the form of bonuses and insane salaries.

they knew the shit storm was coming. now the american people are expected to pay for that.

the congress helped too because they got theirs in the form of campaign contributions, jobs, etc....

and everybody is guilty, that's why there is no investigation.

Credit can't flow because there is no asset value to back that credit. We traded it away for cheap labor.

any solutions?

pigs at the trough.

Nice piece, but missing a whopping big operand: It's yet another variant of the three-shells and pea game, with a few rich fucks dumb enough to try this centuries old con, not savvy enough to realize as any street magician knows: Whoever's handling the shells is always in control of the pea - you cannot win this game!

Derivatives, swaps, whatever fancy name you wish is still a shell game, and if you're stupid enough to play, you deserve the loss.

Next time, go play poker, dipwits.

"If you're stupid enough to play you deserve the loss."

Problem is, all the ordinary investors who DID NOT PLAY are the real losers in their 401k's and other accounts.

The fraud in Wall St. is affecting ordinary shares and investors who never opted into this game.

They are "dipwits" I guess for trusting their money to the stock market.

Problem is, all the ordinary investors who DID NOT PLAY are the real losers in their 401k's and other accounts.

#12 | Posted by johnjkavanagh

My point exactly. Nobody would care if it was just a few rich bankers that lost their shirts because of bad choices.

If they knew that the investments they were making was based on a shell game, they would not have invested. But they were mis-led and lied to, even up until the days before the melt-down. revolutions have started with less incentive.

the enron executives went to prison for this scheme but these wall street assholes get rewarded.

The silent majority may not march in the street and rain death and destruction down on the united states for this slight, but the honor and integrity of our once great country is severely damaged and the only thing that will repair it is justice on the evil-doers.

take their money and give it to the stockholders and put those criminal fuckers in jail.

chicks for free

any solutions?

Yeah - it should have been done before the criminal bail out was passed. The fundamental problem is that banks do not know which other banks are solid financially so they are restricting credit to all other banks which is why LIBOR is so high.

What the government should have done:
1.) Shut the markets for 3 days
2.) Send in bank regulators and put all banks into 3 catergories - Financially Sound, Able to be saved, Not able to be saved
3.) Let the banks that were truly bankrupt go under
4.) Make an unwavering commitment to the surviving marginal banks and recapitalize them by taking an ownership stake (massive dilution to current shareholders).

It is that simple and would cost a lot less than $700B. The fed's policies encourage mis-trust by making it seem like the whole system could collapse and not weeding out the bad apples. Next, they remove mark to market accounting which makes it impossible for banks to assess the risk of other lending institutions as the balance sheets are now completely made up.

The level of incompetence displayed and the rush to give away $700B in taxpayer money makes me question whether solving the problem is really their intention.

the derivatives market is an unregulated $63 trillion gambling casino.

larger than the US Government.

enough money to give every man women and child in this country a free $200,000 house.

The $1 trillion wasted so far, only helps the friends of Paulson. It is enough to prevent the foriegners cheated with fraudulent swaps (fake mortgage insurance) not to sue for fraud.

now all we have to do is wait for the other shoe to drop, which will be after the election.

the derivatives market is an unregulated $63 trillion gambling casino.

larger than the US Government.

enough money to give every man women and child in this country a free $200,000 house.

That is not accurate by any strech of the imagination. First, the 'size' of the market can be measured many ways. The $63T number is based on adding up the notional amount - which is an incorrect way to size the market. Here is an example:

1.) Suppose you are a company with a variable interest rate that you want to change to a fixed rate using a swap (counter-party wants to do the opposite).
2.) Your interest payment is $1M/quarter which is about a 4% interest rate ($100M loan with 4% annual interest rate).
3.) At the end of the quarter, will give floating rate/4 * $100M in exchange for $1M. If the floating rate is 4%, the contact is worth nothing no money changes hands.

Now, how do you classify this in the derivatives market
a.) $1M
b.) $2M ($1M by each party)
c.) $100M (notional of the loan)
d.) $200M (notional by each party)

Well, when you see the $63T number quoted, they are using method d.), which is a vast overstatement of the size of the market. The actual settlement should be +/- $500K/Q (floating rate likely 3.5% - 4.5%).

Derivatives are not stocks, bonds or loans. They are bets on commodities, such as gasoline, or fake insurance.

The first estimate I heard was $56 trillion, in pHD economist Paul Craig Roberts opinion. Last night The News Hour reported this number to be $63 trillion. These numbers are estimated by trade insiders and very close to eachother, but individual transactions are secret, so the number is hard to prove.

$200,000 per man, woman, and child. Gambling without Capital Reserves so far all at taxpayer expense.

Everyone involved in this bs should be thrown UNDER the prison-then the hole sealed with concrete.

The level of incompetence displayed and the rush to give away $700B in taxpayer money makes me question whether solving the problem is really their intention.

#15 | Posted by Jacque_Strap

exactly!!!

There is a huddle in the White House this weekend.
The goal?
Bail out banks, Wall St. and the rich and leave the taxpayer holding the bag.
Suckers.