storm999

Is Dubai's Default a Black Swan Event?

It's only a black swan if you didn't realize that we are going to have a wave of sovereign defaults, in which case you are a mark, not an investor.

Is Dubai's Default a Black Swan Event?

Interesting information. The behind-the-scenes and manipulation to fund intelligence and political operations is one of the reasons the markets are inefficient.

In 1989 Catherine Austin Fitts became Assistant Secretary for Housing in Department of Housing and Urban Development (HUD). She began to notice money was not properly tracked as it moved between different HUD departments and there was a lack of proper accounting mechanisms to deal with discrepancies in revenue indicated fraud at an alarming level. [28] She attempted to put in place some credible financial tracking mechanisms to identify where the money was going and to identify the responsible individuals and HUD departments, but after 18 months on the job she was suddenly fired by the Bush administration. Fitts was told the day after she left that her financial reforms through ‘place-based financial accounting and statements’ would also be terminated. [29]


On Nov 27 09:57 AM Tony Ryals wrote:

> The newssophisticate of October 1, 2007 sums it up pretty much for
> me except for who in the U.S. government and U.S. market oversight
> should be held responsible.I feel Christopher Cox's SEC as well as
> Mary Schapiro's FINRA should take some responsibility for failing
> to be whistle blowers but who else ? The CNN,Fox,CNBC news monopolies
> FAILED TO REPORT TO AMERICAN PUBLIC THAT THEY WOULD NOW BE GIVING
> MONEY TO SHEIKH AL RASID MAKTOUM EVERYTIME THEY WERE CONNED INTO
> 'INVESTING' IN THE NASDAQ.And that is possibly even worse than giving
> money to Bernie Madoff considering it was his country DUBAI THAT
> SENT MONEY FROM SHEIK KALID MOHAMED TO MOHAMED ATTA ET.AL. IN VENICE,FLORIDA
> PRE 9/11 !
> I'd say Bush-Cheney should take some responsibility because it happened
> on their watch but Barack Obama and Rahm Emanuel knew about the Sheikh's
> role in 911 and the NASDAQ as well as how the American public reacted
> when CNN and Fox reported that Dubai Ports would take over security
> at U.S. ports.So how did he get the NASDAQ and doesn't his country's
> financial mess make him suseptible to bribery and manipulation by
> those who would harm the U.S.markets where NASDAQ does most of its
> 'business' ?
> Also take note of the fact that had
> Iran bought the NASDAQ or 26%,(and who got the other 20%+ voting
> rights Al Rashid forfeited ?),THE ISRAELI MONEY LAUNDERERS WOULD
> BE GOING CRAZY.
> This in itself is proof of the fact that Al Rashid and the far right
> Israelis who run penny stock and other stock scams on the U.S.market
> feel he is someone they can trust,(to our detriment).For example
> I noted that ICTS International of Israelis Menachem Atzmon,(convicted
> of moving money from Israeli gov to Likud Party),and Ezra Harel,(who
> ran numerous stock sams before dieing in 2003),that had been removed
> from NASDAQ in 2006 is quietly back on the NASDAQ website posing
> as an upstanding company even though it 'guarded' (unsuccessfully)Logan
> Airport Boston on 911 AND BOUGHT HUNTLEIGH AIRPORT SECURITY SERVICES
> AT THE EXPENSE OF DEFRAUDED AMERICAN INVESTORS !
>
> newssophisticate.blogs...
>
>
> When Sheikh Mohammed bin Rashid Al Maktoum decided he wanted a part
> of the western financial markets...he set his strategic plan to get
> it. On August 6, 2007 he created Borse Dubai, a holding company which
> essentially consolidated the all Dubai 'exchanges' under one 'holding'
> company. Now remember...The Sheikh owns this 'holding company' it
> is his. It is a STATE OWNED company.
>
> Shortly after its' birth it began a bitter battle with NASDAQ for
> months over OMX. OMX is a Swedish/Finnish financial services company
> with an amazing highly desired integrated 'back end technology' which
> consolidates other money market 'exchanges'. Formed in 2003, OMX
> has become a financial leader which makes gaining OMX paramount.
>
> [OMX] in addition to owning and running exchanges in Sweden, Denmark,
> Finland, Iceland and the Baltic states, provides technology to about
> 60 exchanges worldwide, including the Australian Securities Exchange,
> Nordic power market Nordpool and the Singapore Exchange. khaleejtimes
>
> All that changed on Sept 20th when NASDAQ and Dubai announced they
> would partner up and attempt a highly controversial 'swap' trade.
> According to the NASDAQ Press release...
> NASDAQ Increases Certainty of OMX Combination
>
> Borse Dubai to become a 19.99 Per Cent Shareholder in NASDAQ;
> Restricted to 5 Per Cent Voting Rights
>
> Steps taken to allow DIFX to be rebranded with the NASDAQ Brand<br/>
>
> NASDAQ to Become a Strategic Shareholder in DIFX
>
> Borse Dubai Purchases a 28.0 Per Cent stake in LSE From NASDAQ<br/>.....
>
> Borse Dubai to become a 19.99% shareholder in NASDAQ (capped at<br/>5
> per cent voting rights)
>
> NASDAQ will acquire all OMX shares to be purchased by Borse Dubai
>
> in its offer for OMX
>
> NASDAQ will become a strategic shareholder and the principal
> commercial partner of Dubai International Financial Exchange
> ("DIFX")
>
> DIFX will be re branded with the NASDAQ brand and licensed with market
> leading technology from the NASDAQ/OMX combination
> Qatar, using the Qatar Investment Authority (QIA) freaked upon hearing
> of the 'agreement' and went on a spending spree. They purchased roughly
> a 10% share of OMX and sent out a release to shareholders of OMX
> to 'take no action' on the NASDAQ/Dubai 'agreement'. Then QIA went
> ahead and purchased a 20% stake in the London Stock Exchange and
> on Friday, bought the remaining 5.3 million shares of NASDAQ owned
> shares in the LSE.

U.S Now Land of Two Economies - U.S Bank Titans and the Rest of US

The new multinational message is global markets. In other words, they are not interested in rebuilding the American middle class. And why should they be? The top 20% of wage earners in India is 200 million people, ditto China. Those are the markets they are going to pursue. More and more I think it's clear, the American people are on there own. Does anyone really think that Haliburton with its corporate headquarters in Dubai is going to sacrifice profit for the good of America? This is the same company whose subsidiary locked a gangrape victim in a container in the desert under armed guard so she wouldn't talk. We need to make being an American company that supports rebuilding America important. That's how we will prosper in the future.

Beware the Current Bull Market in Derivatives

The OCC, in its quarterly derivatives report, routinely notes that the Big Four “have the resources needed to be able to operate this business in a safe and sound manner.” --This reads more like pure fantasy than revisionist history. Don't they remember last September when the credit markets froze up?
Let's hope President Obama can get a well-regulated derivatives exchange set up. Greenspan has already admitted he was flat out wrong in his Panglossian assessment of the OTC derivatives markets.

Five Reasons the Market Could Crash This Fall

But remember the great bulk of the President Obama's fiscal stimulus is coming now and next year. It is infrastructure and energy projects, like the new battery factory in Indiana, designed to create jobs. On the downside, though, the option-ARM loans will be adjusting. With any luck, we all avoid the deflation you describe. Nobel laureate Stiglitz is already calling for a second stimulues and I'm sure Mr. Bernanke has some ideas, if it looks like deflation is taking hold.




On Aug 06 02:47 PM AuGod! wrote:

> In a nutshell: This is a debt driven rally - Remember that your Dollars
> are government debt - government is also a direct investor in the
> general markets these days - large private investors are on the sidelines
> - the economy is shrinking - consumers are squeezed - unemployment
> will rise with slowing demand - demand will shrink with growing unemployment
> - credit defaults will grow - lenders will not lend - institutional
> investors are playing "doomed minions" with small investors money
> = a vicious circle for the economy. The rot which began at the top
> will not be purged but will be paid for by everyone beneath. Look
> out below! We can always laugh it off if hopes for the best materialize.
> It could get very ugly if you are not prepared for the worst.

Five Reasons the Market Could Crash This Fall

I don't buy this $2.3 trillion fed injection. The market only trades a portion of the float each day, but the market valuation is the closing price times the whole float. For example if Cisco has a 100 mm share float and trades an average of the 1mm shares/day then on a day that Cisco trades up $2/share the market valuation of the company and its indices rises $200 million.

I'd like to see the source of the derivatives numbers. It is a scary looking number on the face of it.

Five Reasons the Market Could Crash This Fall

I don't buy this $2.3 trillion fed injection. The market only trades a portion of the float each day, but the market valuation is the closing price times the whole float. For example if Cisco has a 100 mm share float and trades an average of the 1mm shares/day then on a day that Cisco trades up $2/share the market valuation of the company and its indices rises $200 million.

I'd like to see the source of the derivatives numbers. It is a scary looking number on the face of it.

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

If your estimate is correct then the question is how much more of their portfolio do they have to unwind because the potential is for another $170 billion loss by your reckoning.


On Mar 30 08:45 PM IsThisRight wrote:

> Let me try to understand the loop :
>
> Figures below are FICTITIOUS --- just as a model ...
>
> 1- AIG, as an insurance company, holds contracts with HIGH liability
> - let's say 60 cents liability on the dollar ( assuming the subprime
> papers are worth 30 cents in the Itraxx index).
>
> 2- The banks hold/own the actual subprime paper which is mark-to-market
> at 30 cents. But the banks believe that the value ( based on cash
> flow) is closer to 60 cents.
>
> 3- AIG keeps saying that their CDS is "senior"--- meaning that they
> do not have to immediately settle until a set condition ( example
> : only pay IF and WHEN the debt cash flow is interupted. So if the
> mortgages still pay 92% cashflow, AIG doesnot pay). But meanwhile,
> on the AIG books, the liability of 60 cents on the balance sheet
> show LARGE loss.
>
> So the unwind:
> 4- IF AIG pays 20cents to the bank to close out the contract, AIG
> balance sheet shows a GAIN of 40 cents ( 60cents liability - 20 cents).
>
>
> 5- The banks never believed that their subprime paper was worth 30
> cents. The banks always said that they are not selling at 30 cents.
> So let's say that they think that it is worth 60cents.
> By receiving 20 cents from AIG, they bought the suprime paper for
> 100 cents, got 20 cents from AIG. So now that the banks can sell
> the subprime paper for 60cents. Sell for 60 cents + 20 cents AIG
> = 80 cents bank income... loss of 20 cents ( 100cents purchase -
> 80 cents income from sales and insurance).
>
> 6- Now Mr G. ( Treasury ) walks in with Hedge Funds - $1T Plan -
> ready to sweep all the subprime away from the banks at 70 cents!.
>
>
> In Step #5 above, the banks get 20 real cents earnings by 'cancelling'
> their insurance held by AIG. AIG 'makes' 40c or avoid loosing 40c
> ( 60 cents liability - 20cents paid). The banks never believe that
> the insurance is worth 60 cents, but they could not claim it either
> ( the banks were getting cash from the mortgages)
>
> Zero Hedge is seeing all these unwind transactions at below value,
> BUT WHOSE VALUE IS TRUE... the market maker value ( Itraxx index?)
> or the value that the two parties agree to close out their liability?
> This CDS over the counter market is unregulated, remember? There
> is nothing that stops one party to accept whatever value agreed by
> both parties to unwind their own transactions.
>
> When you have a car accident and the adjuster gives you a value for
> the repair, you can always negotiate a settlement price and turn
> in the damage car. The subprime papers are being adjusted to be traded
> in.
>
> We should remember that the 'Banks Gains' are partly reversal of
> "loss" that they alreay took in 2008. The AIG gains are reversal
> of write-downs / reserve that they took in 3Q and 4Q 2008. The real
> 20cents that they transfer to the banks are capital that AIG will
> collect when they sell their other divisions ( airplane leasing...).
> AIG looses Broadwalk in the monopoly game; the banks' real losts
> are 100cents on the dollar minus what they get selling to the Treasury+Hedge
> Funds.
>
> The CDS market loose the VOLUME of business on naked CDS. there will
> always be covered CDS on real bonds, but the insurance company will
> need to post real capital to cover potential claims.
>
>
> Estimates:
> AIG took a loss of $60B in 4Q2008. And we know that they decreased
> their CDS portfolio from 2.3T to 1.7T = delta $600B. So in round
> figure they paying 10 cents per portfolio dollar ( 60B / 600B) just
> to close out the CDS contracts.

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

Hey let's not shoot the messenger. I am grateful that these emails get out and that we can all read and discuss them. If it weren't for the internet, we wouldn't have a chance to find out what is going on.


On Mar 30 10:10 PM CJJ wrote:

> Wake us all up when you have a shred of fact. Can't wait until bloggers
> save the world. Oh yea, you can't save the world sitting behind a
> computer.
> This guy does a good job, but he's also the same guy who quoted a
> silly senator that claimed all money market funds were minutes away
> from being pulled back in September. That one was categorically false.
>
> Believe what you want to believe. Just like religion, make believe
> may sound good but it ain't real.

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

I agree that this sounds more like AIG dumping risky assets in bulk at a steep discount in order to clean up the balance sheet and preserve the core business. The government is much more concerned about what happens if AIG goes into bankruptcy than about counterparties making fat profits. The fact, that the buyers are sick banks that need a little juice is a side benefit not the motivation. Since the CDS market seized up and the pricing models failed, liquidating a portfolio has to be done at a discount and obviously the money is going to go to the buyer in the liquidation. This is the financial equivalent of the people who bought thousands of dollars of servers for a penny on the dollar (or less) during the dotcom bust.

That being said the taxpayer is still on the hook and this is something else that will anger Joe Public.