Jim Myrtle's Comments

Is A QE Exit Really Scary?

Wed, 22 May 2013 21:33:35 -0400

"But, hey, everyone is entitled to their opinion (belief), and that is really all it is"

His belief seems to contain more facts than your belief.

Is A QE Exit Really Scary?

Wed, 22 May 2013 21:31:31 -0400

What do you think about CalafiaBeachPundit's (the author's) statement:

<< It's not scary at all if you believe, like I do, that the primary goal of QE was not to "print money" or stimulate the economy, but rather to satisfy the world's apparently insatiable appetite for safe-haven, risk-free assets. >>

He doesn't have it backwards, you do .
The risk free asset is dollars.

Is A QE Exit Really Scary?

Thu, 16 May 2013 22:47:26 -0400

Grayson is funny. Clueless, but funny.

Is A QE Exit Really Scary?

Thu, 16 May 2013 21:52:55 -0400

"The Fed is privately owned"

Is that why the Treasury received $89 billion of the $91 billion in Fed profits last year?

It Can Happen Here: The Confiscation Scheme Planned For U.S. And U.K. Depositors

Tue, 07 May 2013 23:09:21 -0400

"Jim Myrtle is content take shots at any details of comments which deviate from accepted Wall Street-Speak"

It's true, I mock the errors I see when people post the conventional "wisdom".

The U.S. Economy: How Did We Get Here? Where Are We Headed?

Thu, 02 May 2013 17:35:03 -0400

"I would add as well that we make it a felony when investment bankers cause financial distress by leveraging assets."

Kill the greedy kulaks, eh comrade?

"Rig now, you can cause your bank t fail and get a severance"

How much severance did Jimmy Cayne get?

The U.S. Economy: How Did We Get Here? Where Are We Headed?

Sat, 27 Apr 2013 16:51:58 -0400

"By holding short-term rates at zero for an extended period gives banks an enormously privileged position over the general public as they are able to borrow huge sums of short-term debt for free"

Who is forced to lend to the banks for free?

It Can Happen Here: The Confiscation Scheme Planned For U.S. And U.K. Depositors

Sun, 21 Apr 2013 12:09:32 -0400

"You can't cut a bond into a number of smaller bonds"

It's done all the time.

"You can't go back to the original parties to the legal contract and ask them to separate it into pieces"

You are correct.

"Thus you create a second instrument that is the "derivative" of the first"

You have actual ownership of the original debt. Not a derivative.

"you have a derivative - an instrument that derives its value from the parent"

No, you actually own part of the parent.
If you buy a futures contract on corn, you don't actually own any corn.

It Can Happen Here: The Confiscation Scheme Planned For U.S. And U.K. Depositors

Sat, 20 Apr 2013 19:27:15 -0400

"Even Bloomberg got it wrong did they?"

Bloomberg? LOL!
Some guy named Kana.

"Not buying what you are selling"

Yesterday you weren't buying that MBS are different than derivatives.
There's still hope for you.

It Can Happen Here: The Confiscation Scheme Planned For U.S. And U.K. Depositors

Sat, 20 Apr 2013 18:05:41 -0400

"So, what are you saying. That no one created derivatives out of MBS in 2008 and that what created the crises was primarily MBS rather than the derivatives?"

There were many derivatives based on MBS. AIG sold CDS on MBS and got their ass handed to them, but.......
I haven't seen a single instance of a bank that went under because they bought or sold derivatives.
I heard of multiple banks, including investment banks like Bear Stearns, Lehmann and Merrill that went under (or had to sell themselves) because they held mortgages or MBS.

It Can Happen Here: The Confiscation Scheme Planned For U.S. And U.K. Depositors

Sat, 20 Apr 2013 17:59:55 -0400

"All that I've read states derivatives played a major role"

Unfortunately you don't have to know what you're talking about before writing about derivatives.

Keep reading, hopefully you'll find some better info in the future.

It Can Happen Here: The Confiscation Scheme Planned For U.S. And U.K. Depositors

Sat, 20 Apr 2013 17:57:40 -0400

"If you don't view derivatives as being risky, that is your opinion. I don't share it."

Define risky.

"So what? A possible collapse isn't important to you?"

Sure it is. It wouldn't be prevented by outlawing derivatives.

"Here’s a link. See “Risky Business”, about pages 6 and 7"

Thanks for the link. Yes, big scary numbers that don't reflect the actual amount at risk.

" I am not interested in debating this."

Good for you.

"You want to keep challenging my views, do so with yourself"

I just want to correct your misunderstandings.
It's difficult to form correct views if your definitions are all wrong.
At least you now have a better understanding of what a derivative is and isn't.

It Can Happen Here: The Confiscation Scheme Planned For U.S. And U.K. Depositors

Sat, 20 Apr 2013 16:01:01 -0400

"What I was referring to by using the term is that there is wayyyy to much leverage as a result of using the instruments, whatever you want to call them"

Commodities futures give plenty of leverage. Is there a problem with them?

"Something unforeseen and unplanned will happen, and due to the size of the outstanding value of the instruments in comparison to the U.S. or world's assets"

They're 2 sided bets. The actual amount at risk is much much much less than the notional amount that scares you. Something unforeseen always happens. So what?

I still haven't seen a list of banks that failed because of derivatives.
Plenty of them failed from holding too many bad, plain vanilla, home mortgages.

It Can Happen Here: The Confiscation Scheme Planned For U.S. And U.K. Depositors

Sat, 20 Apr 2013 15:42:37 -0400

"No the first mortgage is not a derivative because you pay the full price for the underlying asset"

Just like the buyers of $1,000,000 in MBS pay $1,000,000.
Even if it's 20 people buying $50,000 each.

"I am saying when you have too much leverage, as there are with $600 trillion (some have estimated it to be $1.2 quadrillion, or double the $600 trillion) versus $60 trillion in assets"

An MBS doesn't give you leverage.

It Can Happen Here: The Confiscation Scheme Planned For U.S. And U.K. Depositors

Sat, 20 Apr 2013 14:53:15 -0400

"A call option contract's value is based upon the underlying asset, the stock"

Yes, a call option is a derivative. You don't own part of a pool of stock when you buy an option.

" I see no difference with an MBS whose value is based on the underlying asset, the pool of mortgages"

You own a portion of the assets in this case. That's why it isn't a derivative.

It Can Happen Here: The Confiscation Scheme Planned For U.S. And U.K. Depositors

Sat, 20 Apr 2013 14:50:54 -0400

"The MBS derives its value from the underlying asset. The security has no value without the underlying asset"

Wrong. A futures contract on an MBS derives its value from the underlying asset.
An MBS is simply a piece of a bond(s).

"I assumed that a pool of mortgages, of say $1,000,000, could be divided up into a number of mortgaged backed securities, say 10 at $100,000 a piece or 20 at $50,000 a piece, not just one"

Yes, cutting a bond into smaller pieces gives you a number of smaller bonds.

It Can Happen Here: The Confiscation Scheme Planned For U.S. And U.K. Depositors

Sat, 20 Apr 2013 14:47:45 -0400

"I showed how the MBS and CDOs meet the definition"

Yes, they may meet your incorrect definition.

"And besides, that is merely technical. What difference does it make what you call the "widgets"."

It's the difference between "derivatives caused the crisis" and "bad mortgages caused the crisis".

"I can't reason with unreasonable people"

Unreasonable? You're funny.

Derivative: A financial instrument, traded on or off an exchange, the price of which is directly dependent upon (i.e., "derived from") the value of one or more underlying securities, equity indices, debt instruments, commodities, other derivative instruments, or any agreed upon pricing index or arrangement (e.g., the movement over time of the Consumer Price Index or freight rates). They are used to hedge risk or to exchange a floating rate of return for fixed rate of return. Derivatives include futures, options, and swaps. For example, futures contracts are derivatives of the physical contract and options on futures are derivatives of futures contracts.

http://1.usa.gov/13nSlvG

It Can Happen Here: The Confiscation Scheme Planned For U.S. And U.K. Depositors

Sat, 20 Apr 2013 13:46:20 -0400

"Where ever I look, MBS and CDOs are called derivatives"

Yes, there is a lot of confusion out there.

A derivative is a bet. A derivative is a synthetic security.
A bond is not a bet. A bond is not a synthetic security.

It Can Happen Here: The Confiscation Scheme Planned For U.S. And U.K. Depositors

Sat, 20 Apr 2013 13:31:54 -0400

"The value of the MBS or CDO is "derived" from the underlying asset or assets"

I disagree. The MBS gives you all or part of a group of bonds.
Divide a bond into 2 (or more) parts, you still have bonds.
Add 2 or more bonds together, you still have bonds.

A futures contract on a bond derives its value from the underlying.

"It has no value in and of itself"

A bond or a part of a bond or a group of bonds does have value in and of itself, it is not a derivative.

"An MBS, made up of a number of mortgages allows an investor to invest a lesser amount than having to buy all the mortgages in the asset pool. The investment costs a lot less than full purchase price for all the mortgages"

You are mistaken. An MBS made up of $1,000,000 in mortgages would cost $1,000,000. You must be thinking of options or futures contracts, which are derivatives.

Thanks for the link. It doesn't support your claim.

It Can Happen Here: The Confiscation Scheme Planned For U.S. And U.K. Depositors

Sat, 20 Apr 2013 12:37:11 -0400

"As I recall, bad risk sub prime mortgages were mixed with good or better risk mortgages to create securities (derivatives)"

I see where your confusion originates. MBS (and CDOs) are bonds, not derivatives.

A derivative would be a futures contract, an option or a CDS, among others.

It Can Happen Here: The Confiscation Scheme Planned For U.S. And U.K. Depositors

Fri, 19 Apr 2013 21:57:27 -0400

"The ongoing U.S. crisis was driven largely by financial derivatives"

Only if you consider a mortgage to be a derivative.

It Can Happen Here: The Confiscation Scheme Planned For U.S. And U.K. Depositors

Fri, 19 Apr 2013 21:52:49 -0400

Which banks would have failed if their winning trades with AIG were not paid off? I can't think of any. Can you?

Gold: Yes, It Will Drop. No, Don't Short It.

Thu, 18 Apr 2013 13:25:35 -0400

"FED member banks are now taking out nonperforming home loans out of the bundled securities and put them together in another bundle that has only nonperforming loans in it that get sold to the FED at full price paid with newly created digital credits"

The Fed only buys guaranteed MBS. They won't buy the ones you imagine banks are selling them.

"These new digital credits are then used by the FED member banks to replace the bad loan taken out of the bunled mortgages with a good loan they pay for with the new digital credits gotten for the bad loan sold to the FED"

Huh? Banks wouldn't use cash to "replace a bad loan", they would use cash to pay down debt.

Your confusing gibberish is confusing.

It Can Happen Here: The Confiscation Scheme Planned For U.S. And U.K. Depositors

Thu, 18 Apr 2013 00:01:37 -0400

Yes, they lost money. I was being facetious.

Still no list of banks that went under because of derivatives.
And no proof that Glass-Steagall would have prevented the crisis.

It Can Happen Here: The Confiscation Scheme Planned For U.S. And U.K. Depositors

Wed, 17 Apr 2013 22:44:23 -0400

Which banks went under because of derivatives?

Winner Takes All: The Super-Priority Status Of Derivatives

Sun, 14 Apr 2013 13:27:32 -0400

"In the U.S. after the Glass-Steagall Act was implemented in 1933, a bank could not gamble with depositor funds for its own account, but in 1999 that barrier was removed"

Good point Ellen, under Glass-Steagall banks were unable to make bad loans. Oh, wait......what?

You're always good for a laugh Ellen.

Glass-Steagall wouldn't have prevented the crisis.

"The tab for the 2008 bailout was $700 billion in taxpayer funds, and that was just to start"

The bank portion of TARP was profitable for the Treasury.
The losing portions were Fannie, Freddie, the auto makers and the mortgage forgiveness program.

It Can Happen Here: The Confiscation Scheme Planned For U.S. And U.K. Depositors

Sat, 30 Mar 2013 15:06:55 -0400

"The credit unions & savings & loans that don't play with the derivatives bookies"

Yes, because credit unions didn't lose any money on bad mortgages.

Which banks went under because of derivatives?

It Can Happen Here: The Confiscation Scheme Planned For U.S. And U.K. Depositors

Fri, 29 Mar 2013 13:39:36 -0400

"Due to the way fractional reserve banking works, if I deposit a check for $1,000 the bank then will loan out $10,000 based on that 'fractional reserve'"

Nope. They can lend ($1,000-reserve held), which is less than $1,000 not multiples of $1,000.

It's The Interest, Stupid! Why Bankers Rule The World

Fri, 22 Feb 2013 01:09:32 -0500

"In effect, the local government borrows at 0.25% instead of at 4 or 5%. It gets the perks that today only banks get"

Who is the idiot that is going to lend to this city at 0.25%?

And do you realize that's an overnight loan? What happens when the other bank realizes your city is a bad risk and refuses to roll over the loan?

I guess they can just declare bankruptcy. LOL!

The 'Crash JPMorgan' Campaign

Mon, 14 Jan 2013 19:18:04 -0500

"They bid an amount, put in a buy at a lower price..Once the silver drops the make the spread!!"

So now they made 2 purchases. Where is the spread? LOL!