Mbuna

Are Banks Being Naughty Again with Derivatives? Could Be Good

Let me get to the core issue here. In every argument and dissertation I have read in support of derivatives there are 2 aspects of the arguments that are present in every single case, sometimes explicit and sometimes implicit. The first of these is the absolute fact that the fundamental reason for the creation of derivatives was so that financial institutions could bypass their capital requirements to gain greater leverage. There are other "beneficial" reasons for the creation of derivatives but they are not the fundamental ones. Those who write in support of derivatives will often mention this aspect but always as a secondary matter to the hedging or insurance aspect of derivatives. This brings us to the second matter that I have never failed to find among those who support derivatives. Not only are they in denial of the fundamental reason for the creation of derivatives but they show all the classic signs of addiction, the signs that they should be in a 12 step program or some other kind of rehab. This is why I call derivatives "financial crack" and those who support derivatives "financial crack addicts". These people will happily warp reality to fit their "modus operandi" but the fact of the matter is you have trillions of dollars hanging on financial engineering whose primary purpose was to skirt regulations in order to gain greater leverage. Fools are born at a far greater rate than every minute

In Defense of the Rating Agencies, Once Again

Okay, first let's take away the myopic narcissistic viewpoint all too typical of someone who has clearly been smoking the financial crack pipe for a bit too long. Don't be offended-there are probably a million others just like you. The financial world is NOT the center of the universe but for too many people it has become a black hole which has warped their thinking in the same way that a real black hole warps time.

So let me put it very simply and clearly- what you are advocating here is the massive fraud that has gone on be continued. You are even saying, somehow, that is necessary and good!? You even think you are completely sane saying this. I think you need to go to a rehab clinic of some kind because this is lunacy. In your view the law must kneel before the financial world out of necessity. You may know the bond market and its foibles but you have lost any vision of the bigger picture. Put down the financial crack pipe please.

The Beginning of the End of Meaningful Regulatory Reform

Yes I agree. Obama's downfall is the financial oligarchs that not only own Congress but they effectively own the executive branch as well. Apparently he does not see this and it's too bad because he will not have a second chance. Geithner and Summers need to be replaced. How about Volcker and then maybe putting William K. Black in some position to make heads roll on Wall St. Mr. Black has said that no one in the current administration has contacted him in anyway. That is sad.

Gold: What Professional Futures Traders Think

The dollar is toast. The dollar is now the primary vehicle for the currency carry trade. Zimbabwe is now issuing bonds in dollars as are some other european countries. It is only a matter of time before heavy dollar devaluation occurs in one form or another. Buying actual gold is a method of capital preservation. I'm advising that it's time to move your dollars into something else for the sake of preserving capital. You have been warned.

The IMF has just announced it will be selling 400 tons of gold a year for the next 5 years. The real reason behind this is to keep the price of gold down, and of course, they are doing this conspiracy with the usual central bank suspects. Their hand has been forced but it will not be enough. Take advantage while you can.

The Recovery Was Too Expensive

Good analysis as always Chris and nice to see you posting here.

Sure It’s Legal … But Is It Right?

I think it's important to understand the bigger picture so here are a few things to think about.

1. The bank bailout was not evidence of moral hazard so much as the demonstration that moral hazard and financial immorality has won the war. Everything that has happened since then is justifiable proof that is so.

2. The financial sector is at the apex of the pyramid but you must add in all the other massive corporate sectors that helped make this happen not the least of which is the mainstream media and its culture. Then you have all the lobbyists who at this point really run the show in Washington DC.

From my point of view the fat lady has sung and we are on the verge of beginning to see just what the consequences of all this are.

5 Reasons Silver ETFs Will Remain in the Spotlight

and for your continued perusal

www.gata.org/node/7586

5 Reasons Silver ETFs Will Remain in the Spotlight

precious metal ETF's need more of this kind of exposure to force the facts to come to light. Courtesy of Zero Hedge, of course.

www.zerohedge.com/arti...

High Frequency Trading: We Fear What We Do Not Understand

Poker players are amongst the best bald faced liars and Kid Dynamite is no exception here. Let's start with a clearly bald faced lie at the end of his article "Full disclosure: no agenda here: ..." What utter bullshit. Now if you didn't have an agenda then why did you even bother to publish this article. You have quite an agenda going here to the point that I wonder who paid you for this neat little piece of Wall St. corporate schilling. I can see from previous articles that you are in support of Goldman Sachs (check his limbs for tentacles!)

Let's take a further look at what interests Kid Dynamite- "This is the main reason I'm against most attacks on high frequency trading. SOMEONE will always be the best - the fastest - the closest - ...", "I like competition in markets." Kid is a big poker fan, traded for a hedge fund, and demonstrates the kind of narcissistic attitude that has become all to common on Wall St. these days.
Clearly the game is what matters to him and nothing else. Now picture all those firms on Wall St. filled with these types of characters, happily gaming the system to the brink of its destruction and what do you have? The recent financial history of Wall St. is what you have. Kid Dynamite along with his Wall St. brethren (and squid friends) do not have the human maturity necessary to responsibly play the games they wish to play. They need to be collared, period.

Unlocking the Money Matrix: Gold Price Suppression

Comex is scamming.....

www.scribd.com/doc/173...

Gold Takes a (Dollar) Drubbing

Gold ETF's along with the Comex gold futures market is scam! Sounds unbelievable, right? Please have a read.

www.scribd.com/doc/173...

Now tell me what you think.

Anticipating Armageddon: A Derivatives Flashback

The most accurate definition of derivatives is that they are "financial crack". The financial industry is hooked on it big time and it has created its own synthetic economy that is ultimately devoid of reality.
Forced rehab is needed.

Exclusive: Big Banks' Recent Profitability Due to AIG Scam?

Ahh yes those banks know exactly what they are doing, right? H/T Naked Capitalsim, from FT Alphaville-

"US commercial banks lost $9.2bn on derivatives trades in Q4 08"

Have a read.
ftalphaville.ft.com/bl.../

Federal Budget Watch: Same Old Talking Points, But the Parties Are Reversed

Budget politics, an ugly subject no matter what angle you're looking at it from. I think there are too many entrenched political interests all around for something wonderful to happen with all of this. That being said, I still think Obama is better than the other real choice we had.

Don't Ban Naked Credit Default Swaps if the Law Can't Be Enforced

Credit Default Swaps were invented in 1997 by a team working for JPMorgan Chase. By entering into CDS, a commercial bank shifted the risk of default to a third-party and this shifted risk did not count against their regulatory capital requirements.

So here we have a multi-trillion dollar market that has grown from an artifice of financial engineering specifically designed to create a loophole in financial regulation which will then allow banks to increase their leverage.. Financial engineering of this sort ultimately serves only one purpose, greed, (while generally playing everyone else for a fool at the same time) and does not benefit the broader economy but only gives the illusion of doing so.. And the proof of that statement has already demonstrated itself, in spades. So here we are with huge bloated financial corporations that created tremendous fake earnings for years and now we finally see the financial sector, the emperor of the US economy with 40% of GDP, and its new clothes. It was and is an illusion and the desire to sustain this kind of financial sector will come to naught.


My view of the entire CDS market is that it is essentially nothing more than financial crack. The entire financial sector is completely addicted to something created out thin air to evade regulatory capital requirements, and they all think it is good for the economy!? They are all a bunch of ADDICTS hooked on this financial crack. Everyone I have read that defends CDS strikes me as an addict. And yes Geithner is hooked on it too. From where I stand, the Fed, the Treasury and Wall St are somehow hoping to turn the US economy back into some giant gambling casino when in fact they are addicted to an illusion that will never bear fruit. The entire CDS market should just be shut down, period.
Start from a position of sanity rather than addiction- the financial sector exists to facilitate the lending of capital for the broader economy. The financial sector itself IS NOT THE ECONOMY. You will never ever see the financial sector sustain 40% of GDP in reality because the broader economy cannot support it. It was a house of cards that was never real. What really has to happen is that the entire sector needs a very serious downsizing.