User 256646's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/256646/comments http://seekingalpha.com/article/97533-no-wonder-the-700-billion-bailout-deal-failed?source=feed#comment-265825 265825 Credit default swaps are contracts between dealers on stocks, bonds, mortgage backed securities or other financial instruments (collectively referred to herein as „securities‟) that can be hedged by selling the securities at the current market value. The credit default traders do not need to own any of the underlying assets to trade the contract. The nature of the credit default swaps is to profit from a future price decline of the underlying contract asset. The most profit is obtained if the security that is the asset for the contract declines to a price of zero. The credit default swaps are accounted for in the books of the major broker-dealers as „off balance sheet transactions‟, hidden from regulators and the investors in these broker-dealers.1 A standard way to profit from large credit default swaps is to trade a swapped contract for a future delivery of a security (several years from the contract date), then hedge the contract by selling the securities into the public markets or to investment funds, such as pension funds. These contracts can then be transferred in another credit default swap trade that can again be hedged by selling the underlying securities. Value of the Credit Default Swaps
The entire incentive for the traders of these contracts is to have the securities financially implode. The value of these so called „contracts‟, which generally require no investment by the contract holders, has been estimated to currently be 58 to 62 trillion dollars. These amounts are understated because only about 10% of the members of the reporting entity, called the International Swaps and Derivatives Association, voluntarily disclose their credit default swap positions.
1 For example: Citigroup Inc. 10-K filed 2/22/2008, Merrill Lynch & Co. Inc. 10-K filed 2/25/2008 and Wachovia Corp 10-K filed 2/28/2008.
To put 60 trillion dollars of these credit default contracts into perspective, the entire U.S. public retirement accounts only amounted to 17.6 trillion dollars at the end of 2007. Sixty trillion dollars is equal to the value of all publicly traded stocks listed on all major global stock exchanges.2 Just the credit default swaps reported equals the value of the companies that make up the world‟s economic engine. September 23, 2008 Senate Banking Committee Testimony of SEC Chairman Christopher Cox: “I will conclude, Mr. Chairman, by warning of another similar regulatory hole in statute that must immediately be addressed or we will have similar consequences. The $58 trillion notional market in credit default swaps to which several of you have referred in your opening comments that is double the amount that was outstanding in 2006, is regulated by absolutely no one. Neither the SEC nor any regulator has authority over the CDS market, even to require minimum disclosure to the market. This market is ripe for fraud and manipulation and indeed we are using the full extent of our anti-fraud authority, our law enforcement authority right now to investigate this market. Because CDS buyers don‟t have to own the bond or the debt instrument upon which the contract is based they can effectively naked short the debt of companies without any restriction potentially causing market disruption and destabilizing the companies themselves. As the Congress considers reform of the financial system in the current crisis I urge you to provide in statute for regulatory authority over the CDS market. This is vitally important to enhance investor protection and to ensure the continued operation of fair and orderly markets.”
“Holding a credit default swap is effectively or nearly effectively taking a short position in the underlying, but CDS buyers don‟t have to own the underlying, they don‟t have to own the bond or debt instrument upon which the credit default swap is based so they can effectively naked short it, this is a problem we have been dealing with, with our international regulatory counterparts around the world with straight equities and it‟s a big problem in a market that has no transparency and people don‟t know where the risk lies.”3 Please Consider
Money in Wall Street does not vaporize in a financial crisis; it is only transferred from investors to those Wall Street participants who benefit from market crashes. There have been very large credit default swap contracts and other methods of naked short selling used against U.S. securities. There is an incentive for the small number of profiteers in these large naked short positions to crash the value of the underlying securities, but this will, as it already has begun to, crash the U.S. economy. These profiteers can then conceal the fact that they have previously stolen the money from the financial system by selling securities they created from sham contracts. There are vast pools of money gained from this activity by a small number of identifiable participants and if the U.S. cannot counteract these pools, financial devastation is assured.
2 World Federation of Exchanges, Annual Equity Market Statistics, Domestic Market Capitalization report. 3 Senate Committee: Banking, Housing and Urban Affairs Hearing in Washington D.C., September 23, 2008, U.S. Credit Markets and Federal Rescue Plan.]]> Fri, 26 Sep 2008 09:54:45 -0400 Credit default swaps are contracts between dealers on stocks, bonds, mortgage backed securities or other financial instruments (collectively referred to herein as „securities‟) that can be hedged by selling the securities at the current market value. The credit default traders do not need to own any of the underlying assets to trade the contract. The nature of the credit default swaps is to profit from a future price decline of the underlying contract asset. The most profit is obtained if the security that is the asset for the contract declines to a price of zero. The credit default swaps are accounted for in the books of the major broker-dealers as „off balance sheet transactions‟, hidden from regulators and the investors in these broker-dealers.1 A standard way to profit from large credit default swaps is to trade a swapped contract for a future delivery of a security (several years from the contract date), then hedge the contract by selling the securities into the public markets or to investment funds, such as pension funds. These contracts can then be transferred in another credit default swap trade that can again be hedged by selling the underlying securities. Value of the Credit Default Swaps
The entire incentive for the traders of these contracts is to have the securities financially implode. The value of these so called „contracts‟, which generally require no investment by the contract holders, has been estimated to currently be 58 to 62 trillion dollars. These amounts are understated because only about 10% of the members of the reporting entity, called the International Swaps and Derivatives Association, voluntarily disclose their credit default swap positions.
1 For example: Citigroup Inc. 10-K filed 2/22/2008, Merrill Lynch & Co. Inc. 10-K filed 2/25/2008 and Wachovia Corp 10-K filed 2/28/2008.
To put 60 trillion dollars of these credit default contracts into perspective, the entire U.S. public retirement accounts only amounted to 17.6 trillion dollars at the end of 2007. Sixty trillion dollars is equal to the value of all publicly traded stocks listed on all major global stock exchanges.2 Just the credit default swaps reported equals the value of the companies that make up the world‟s economic engine. September 23, 2008 Senate Banking Committee Testimony of SEC Chairman Christopher Cox: “I will conclude, Mr. Chairman, by warning of another similar regulatory hole in statute that must immediately be addressed or we will have similar consequences. The $58 trillion notional market in credit default swaps to which several of you have referred in your opening comments that is double the amount that was outstanding in 2006, is regulated by absolutely no one. Neither the SEC nor any regulator has authority over the CDS market, even to require minimum disclosure to the market. This market is ripe for fraud and manipulation and indeed we are using the full extent of our anti-fraud authority, our law enforcement authority right now to investigate this market. Because CDS buyers don‟t have to own the bond or the debt instrument upon which the contract is based they can effectively naked short the debt of companies without any restriction potentially causing market disruption and destabilizing the companies themselves. As the Congress considers reform of the financial system in the current crisis I urge you to provide in statute for regulatory authority over the CDS market. This is vitally important to enhance investor protection and to ensure the continued operation of fair and orderly markets.”
“Holding a credit default swap is effectively or nearly effectively taking a short position in the underlying, but CDS buyers don‟t have to own the underlying, they don‟t have to own the bond or debt instrument upon which the credit default swap is based so they can effectively naked short it, this is a problem we have been dealing with, with our international regulatory counterparts around the world with straight equities and it‟s a big problem in a market that has no transparency and people don‟t know where the risk lies.”3 Please Consider
Money in Wall Street does not vaporize in a financial crisis; it is only transferred from investors to those Wall Street participants who benefit from market crashes. There have been very large credit default swap contracts and other methods of naked short selling used against U.S. securities. There is an incentive for the small number of profiteers in these large naked short positions to crash the value of the underlying securities, but this will, as it already has begun to, crash the U.S. economy. These profiteers can then conceal the fact that they have previously stolen the money from the financial system by selling securities they created from sham contracts. There are vast pools of money gained from this activity by a small number of identifiable participants and if the U.S. cannot counteract these pools, financial devastation is assured.
2 World Federation of Exchanges, Annual Equity Market Statistics, Domestic Market Capitalization report. 3 Senate Committee: Banking, Housing and Urban Affairs Hearing in Washington D.C., September 23, 2008, U.S. Credit Markets and Federal Rescue Plan.]]> http://seekingalpha.com/article/97533-no-wonder-the-700-billion-bailout-deal-failed?source=feed#comment-265773 265773 Fri, 26 Sep 2008 09:20:55 -0400 http://seekingalpha.com/article/97306-the-700-billion-disconnect-lost-in-translation?source=feed#comment-264461 264461 Thu, 25 Sep 2008 05:35:32 -0400 http://seekingalpha.com/article/94171-why-dell-wants-to-sell-its-factories?source=feed#comment-246761 246761 XPS1730. On the face of it a great concept. In real life a rag bag of problems. After only three days a new power supply needed. Shortly ater another one. Three months later another one and a new motherboard. After a few weeks an internal charger failure leading to a loss of data, then a reformat of the disc advised by Dell staff with all the attendant stress and reloading. Another new power supply and then another go at a new mother board. All this with 24hr next day warantees, only as good as the attending engineer. Finally insisting on a new replacement machine, refused. So a return to the factory for a total refit, mboard, both discs, processor and keyboard. This took two weeks. In total I lost around five weeks of vital machine time at very considerable cost in money and time. I sent emails requesting compensation in cash or kind, refused. Do you want to be in bed with this lot??? HELP!!! How can I get compensated !!!
Comment by Sandy - September 5, 2008 at 10:42 am
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]]> Sat, 06 Sep 2008 05:09:48 -0400 XPS1730. On the face of it a great concept. In real life a rag bag of problems. After only three days a new power supply needed. Shortly ater another one. Three months later another one and a new motherboard. After a few weeks an internal charger failure leading to a loss of data, then a reformat of the disc advised by Dell staff with all the attendant stress and reloading. Another new power supply and then another go at a new mother board. All this with 24hr next day warantees, only as good as the attending engineer. Finally insisting on a new replacement machine, refused. So a return to the factory for a total refit, mboard, both discs, processor and keyboard. This took two weeks. In total I lost around five weeks of vital machine time at very considerable cost in money and time. I sent emails requesting compensation in cash or kind, refused. Do you want to be in bed with this lot??? HELP!!! How can I get compensated !!!
Comment by Sandy - September 5, 2008 at 10:42 am
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