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

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.

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.

Added Debt Won't Rescue the Great American Ponzi Scheme

Amen brother amen! The pain cannot be escaped. You can pay it now or pay it later. Guess which one will hurt more. I feel we are headed for a train wreck but may Grace and wisdom intervene for a more benign scenario.
(I especially liked the graph of deposits in failed banks as a % of nominal GDP.)

Current Popular Argument Against AIG Bonuses Takes the Wrong Viewpoint

On the contrary no sane taxpayer wants to touch what the financial sector has its hooks into.

www.rollingstone.com/p...

And yes Goldman would have failed, beyond a shadow of doubt- not just because of the financial hit they would have taken but the hit that the revelation of their exposure would have done them in. These institutions are so corrupt I say let em all fail. Start fresh.

The Economics of Vilification

Let's fan the flames some more
www.rollingstone.com/p...

The Economics of Vilification

Blankfein, Paulson, and the rest of the Goldman Sachs cabal needs investigation, indictment, and prosecution. Nothing less will suffice with that bunch.

Jamie Dimon says "“When I hear the constant vilification of corporate America, I personally don’t understand it,” Dimon said in his speech. “I would ask a lot of our folks in government to stop doing it because I think it’s hurting our country.”

Here is the problem that Dimon in fact exemplifies- He thinks that he and and the corporations of this country are America. Citizens no longer count- corporations are what count. Under the previous administration, via regulation, laws and court cases, the rights of corporations have been put above those of the citizen. So this is the foul myth that those bank CEO's, with the help of government insiders (yes probably Summers and Geithner among them) are intent on continuing. Now I would not say that this is some "conspiracy", it's just how they think it should be. I would almost call it an unconscious conspiracy because clearly they are all blinded by their own bubble.

The financial sector of this economy has been a huge gambling house of cards that cannot be sustained. All the major financial institutions took part in a huge ponzi scheme of mortgage securities and CDS vapor policies. None of them and I mean NONE OF THEM have grounds on which to speak. Like a bunch of drug addicts we are all supposed to believe they mean good now just because they can no longer sustain their habit. What utter BS. They should all be sent to rehab, literally.

Now for some banking reality. First there is up to $2 trillion of bad commercial real estate loans that you haven't heard anything about. Does the Fed have the capability to hide it under the rug forever? I don't think so. They've go another $500 billion in CDS to unwind before the commercial real estate tsunami hits so they will likely be out ammunition. Stay tuned.

Ultimately the piper has to be paid and that means pain, in this case financial pain. No one wants to get the real lesson of life here and that is that YOU must be responsible for what you have wrought. There simply is no way to rectify this situation without learning the lesson. I think it will take a lot more pain before the bank executives come around because they clearly think they are the bulwark of America even as they rob us all due via their own blinding addictions.