Credit Default Swaps

[Phokus]

Originally posted by: Genx87

Originally posted by: Phokus

Originally posted by: Genx87

Originally posted by: Phokus
Free Market ideology wins again.

This isnt a free market problem. It is a lack of govt regulation problem. A free market without regulation is anarchy. Anarchy has never produced anything but more anarchy and instability.

How can a market be "free" when it's regulated :laugh:

The only thing free market nutjobs think the government should have a hand in is enforcing contracts/protecting private property rights. That's all. To say anything else is dishonest.

Do you have any idea what a "free" market is? Free markets are not anarchy which is what an unregulated market is. A 'free"market is a market that allows people to exchange goods with minimal interference but has a framework so the playing field is level and prevents abuse\fraud.

What are you, a statist?

What i described is basically what most libertarians believe when it comes to private property and business transactions. I should know, i used to be a libertarian myself until i realized it just doesn't work. Anarchists believe there should be no government. Libertarians believe that there should be a minimalist government as i described.

 

[BoberFett]

Originally posted by: Phokus

Originally posted by: Genx87

Originally posted by: Phokus

Originally posted by: Genx87

Originally posted by: Phokus
Free Market ideology wins again.

This isnt a free market problem. It is a lack of govt regulation problem. A free market without regulation is anarchy. Anarchy has never produced anything but more anarchy and instability.

How can a market be "free" when it's regulated :laugh:

The only thing free market nutjobs think the government should have a hand in is enforcing contracts/protecting private property rights. That's all. To say anything else is dishonest.

Do you have any idea what a "free" market is? Free markets are not anarchy which is what an unregulated market is. A 'free"market is a market that allows people to exchange goods with minimal interference but has a framework so the playing field is level and prevents abuse\fraud.

What are you, a statist?

What i described is basically what most libertarians believe when it comes to private property and business transactions. I should know, i used to be a libertarian myself until i realized it just doesn't work. Anarchists believe there should be no government. Libertarians believe that there should be a minimalist government as i described.

So you don't think that writing trillions of dollars in "insurance" with no ability to pay on any of the claims doesn't fall under fraud?

 

[Fern]

Originally posted by: jman19
CDS contracts don't get enough attention? Have you been living under a rock?

No, I don't think so.

I'm wondering if that's where a lot of our bailout money is going.

Since there's no transparency there (at least that I can see) I can't really tell. I've lately read that $38 Billion of the money AIG received went to foreign banks. Why? Was it CDS? I'm thinking so ATM.

Edit: Link This article details some of the payments that went to foreign banks (I'm coming up with about $34-36 Billion)

Fern

 

[her209]

Originally posted by: Fern

Originally posted by: jman19
CDS contracts don't get enough attention? Have you been living under a rock?

No, I don't think so.

I'm wondering if that's where a lot of our bailout money is going.

Since there's no transparency there (at least that I can see) I can't really tell. I've lately read that $38 Billion of the money AIG received went to foreign banks. Why? Was it CDS? I'm thinking so ATM.

Fern

Collateral.

link
link 2

 

[Nemesis 1]

Good thread Fern.

Not to distract or raise alarm further. Its stated here many say they understand the CDS thing good . We understand were talking leveraging here.

The Fed just added what 3 or was it 300 billion? to the system ok . The Fed allows the banks to leverage X90 on that 300 billion . The banks are still allowed even today . To loan out to us. 90x300 billion. Thats the real amount of new credit. The real amount of cash is only 300 billion. They ain't fixen nothing. That 300billion the Fed added to the system is straw that broke our backs. Out of everthing thats happened this 300billion from the Fed is what it was all about to begin with. The Fed will call in these loans and cut money supply and end up owning AMERICA. It was the Fed who started calling in AIG default loans.

Than the Fed stands back and says bad AIg . Nice move by Fed. But its the Fed that caused all this to start with. Once you understand that the Fed, Allows 90x leverage of money it gives banks. Its easy to see it wasn't government regulations that are the problem. Even tho it contributed to the problem . The real problem is unragulated FED.

Banks can right 90x the amount they recieve from fed. These Bastards need to be hung . Starting in America here with David Rockefeller.

 

[Lemon law]

Where does this notion come from that AIG has any worth, its so deep in debt, that anyone who is a pennyless skid row bum is infinitely more solvent.

The other thing that we must consider is the following, not only did AIG and its ilk wreck the entire US economy with its compulsive gambling casino, they also wrecked the entire world economy as well.

And basically the USA and all its people are living on debt, ever since our balance of trade went South in 1980. And the day the rest of the world quits loaning us money will be the day our standard of living implodes and the merry go round stops.

How much higher can we build this house of cards before something else takes it down anyway?

So to a certain extent, the USA does have to make the rest of the world whole, or they will quit loaning us money. And you guessed it, so the US government borrows more foreign money, hoping to pay Peter by tempting some other sucker.

 

[bamacre]

Originally posted by: Phokus

Originally posted by: bamacre

Originally posted by: Phokus

Originally posted by: Genx87

Originally posted by: Phokus
Free Market ideology wins again.

This isnt a free market problem. It is a lack of govt regulation problem. A free market without regulation is anarchy. Anarchy has never produced anything but more anarchy and instability.

How can a market be "free" when it's regulated :laugh:

The only thing free market nutjobs think the government should have a hand in is enforcing contracts/protecting private property rights. That's all. To say anything else is dishonest.

Then why the "Free Market ideology wins again" sarcasm? Where do you think all the money came from? Do you think those "free market nutjobs" supported Greenspan and his easy money policy? Fractional Reserve banking even? Fannie and Freddie?

Those "free market nutjobs" as you say, are the ones trying to keep the banks in check. It's your government that can't handle them.

Because CDS were unregulated? This has nothing to do with Greenspan and the Fed. Did you even read the OP? The explosion of CDS's happened after the deregulation. So, these assholes were 'free' to create these toxic and irresponsible insurance contracts to destroy our economy. Get it? Good.

Ok, well let's get back to what you said, what I referenced...

Free Market ideology wins again.

Of course, this was sarcastic, and you really mean "Free Market ideology loses again."

So, then taking into consideration everything else that you have said, can you not see that what you should have said is that we need regulation, because we aren't operating in anything even resembling a free market. Because otherwise, you are ignoring all the other aspects surrounding this issue. And again, those "free market nutjobs" as you say, weren't the ones celebrating the deregulation, they are the ones opposing what actually made that deregulation irresponsible to begin with. You can't ignore the questions, where did the money come from? Where did the moral hazard come from?

 

[Fern]

Originally posted by: her209

Originally posted by: Fern

Originally posted by: jman19
CDS contracts don't get enough attention? Have you been living under a rock?

No, I don't think so.

I'm wondering if that's where a lot of our bailout money is going.

Since there's no transparency there (at least that I can see) I can't really tell. I've lately read that $38 Billion of the money AIG received went to foreign banks. Why? Was it CDS? I'm thinking so ATM.

Fern

Collateral.

link
link 2

Thanks, from your link:

The government has lent almost $50 billion to AIG, mainly to make sure the insurer's derivatives unit, AIG Financial Products, has enough money to meet collateral demands on the CDS contracts it wrote.

So, it (or much of it) is for CDS.

Fern

 

[Fern]

Originally posted by: Lemon law
Where does this notion come from that AIG has any worth.....
-snip-

AIG has many subsidiaries that are profitable.

It was their one subsidiary, AIGFP, that has the problems. And if Liddy is to be believed it's only 2 of 3 divisions within AIGFP that are problematic (the MBS and CDS divisions).

So, many of AIG's other subs have value, and (again) I think AIG will eventually be broken up and those with value sold-off.

Fern

 

[Fern]

Originally posted by: Nemesis 1
-snip-
The Fed just added what 3 or was it 300 billion? to the system ok .

Yeah, the $300 billion was purchase of LT gov bonds, but there was another part o fthat plan that included $750 billion of mortgages. The total looks to be closer to $1.2T

The decision to hold rates near zero was widely expected. But the Fed's plan to buy government bonds and the sheer amount -- $1.2 trillion -- of the extra money to be pumped into the U.S. economy was a surprise.

Link

Fern

 

[Nemesis 1]

Originally posted by: Phokus

Originally posted by: bamacre

Originally posted by: Phokus

Originally posted by: Genx87

Originally posted by: Phokus
Free Market ideology wins again.

This isnt a free market problem. It is a lack of govt regulation problem. A free market without regulation is anarchy. Anarchy has never produced anything but more anarchy and instability.

How can a market be "free" when it's regulated :laugh:

The only thing free market nutjobs think the government should have a hand in is enforcing contracts/protecting private property rights. That's all. To say anything else is dishonest.

Then why the "Free Market ideology wins again" sarcasm? Where do you think all the money came from? Do you think those "free market nutjobs" supported Greenspan and his easy money policy? Fractional Reserve banking even? Fannie and Freddie?

Those "free market nutjobs" as you say, are the ones trying to keep the banks in check. It's your government that can't handle them.

Because CDS were unregulated? This has nothing to do with Greenspan and the Fed. Did you even read the OP? The explosion of CDS's happened after the deregulation. So, these assholes were 'free' to create these toxic and irresponsible insurance contracts to destroy our economy. Get it? Good.

You understand a good part of the problem . But to gloryify the fed is a joke. If a private Bank(FEd) can borrow Money to other private banks.(BA) .Than allow those banks to leverage the amount they recieved by 90x . Than there is something wrong with your reasoning. The Ratio should be 1:1 not 90x:1. The only ratio that works mathwise fot the GOOD of ALL. IS 1:1 Any other ratio 1:2 for instances favors the banks and promotes SELF. Here is simple example now understand this , and you shall know the beast.

1:1= Fed loams banks 1 billion. Banks borrow out 1 billion. Fed calls in loan of 1 billion.
Banks need to give fed 1 billion . If no defaults its not a problem. If default. Bank has to cover short.

Now lets take that to 1:90 ratio . Fed gives bank 1 billion ,. Bank makes loans in the amount of 90 billion.

Fed cuts money supply calls in 100 million of its 1 billion dollar loan at their discression. Banks have to scramble to give fed 100 million . So they need to call in 900 million in debt. If there are defaults which increased probabability of 90x more defaults at 1:90 ratio than 1:1 ratio. This is a HUGH differance. and is a plan to steal away our resources by international thugs who are above the LAW they are immune . LOOK it up. Or they hide behind an illegeal contract because it cann't be broken . Who says. If they are immune I say NOONE has authority over another. Lets Kill these untouchables and watch the world heal itself.

Now take that 300billion and give it a ratio of 1:90 and tell me you can't see plain the theft of Americas resources. Once all of that 300 billion has been leveraged out to 27 trillion dollars. It will be circulated threw out the world. Than the fed will tighten pull the money supply down and collect its illeagally attainted resources. They already have the Gold out of Knox . My proof is the fact government refuses to audit the Gold . Which means its not there. Praise the fed as Aig is nothing more than a coverup. Who better to blame than the insurance company. Better them than say a Bank . Or The Stolen 401k stock funds. Aig is a problem . But they are the Feds scape goat. To take attension away from the Fed and its group of international bankers.

I say this with a true heart. The worse terrorist in the World today . Are the People in Control of The Fed. Bank of England IBF. They found all wars . Cause all starvation . These men have to die. When the world comes to terms with this than and only than can we move forward. They say amongst themselves that they Molded us threw. war/ econamonic hardship/ starvation /slavery. I think its time we Show them the fine work they have done in our making . They have Made us Cold Hard and Strong. Its time to shed the shacles they place on us. Reject all there teaching from time beginning give authority to No man . We have the internet we do not needed these bankers and the puppet governments of the world. Its time for the peole to make their own choices by majority rule. Representative government is no longer functional. Under the terms of the constition of the USA. We have the right to fix that which is broken threw revolution.

Time to Get the International bankers and everyone involved with them and send them all into combat war. For our entertainment. After there gone world can disarm. and become enlightened. Something they have stolen from us . Look real hard at your history books its not correct . Easily proven also.

Were all worried about an engineered economic collapse here. WHY? What are they trying to pull our attention away from. There is so much going on thats bad its hard saying.

Just for instance without going into to conspiercy. Go to Google earth. Go to anartica.

look for yourselves. Why is over 1/3 of the interior shaded so you can't see detail .

Than zoom in on those places. Use your own eyes. Than back out and look at the size of that place. What the hell is going on? Who paid for that. I mean look its had to have cost trillions.

 

[da loser]

Originally posted by: Nemesis 1
Just for instance without going into to conspiercy. Go to Google earth. Go to anartica.

look for yourselves. Why is over 1/3 of the interior shaded so you can't see detail .

Than zoom in on those places. Use your own eyes. Than back out and look at the size of that place. What the hell is going on? Who paid for that. I mean look its had to have cost trillions.

:laugh:

 

[Acanthus]

Holy shit, nemesis has gone way off the deep end.

 

[Nemesis 1]

Originally posted by: Acanthus
Holy shit, nemesis has gone way off the deep end.

Whats the crasiest part. Acanthus. The part about world bankers being immune from prosecution under the law. Its a fact. Show me proof of a international banker going to prison for treason.

How can the same people who own the federal reserve borrow money to both America and germany during the war to finance the war. the private federal reserve bank any american member would have been guility of treason for aiding American enemy. But not these freaken asswipes. They can Aid our enemies with imunity. Even if there US citizens. Its a fact. Find out. I hate these bastards with all I have to hate with . They are the root of the problem . Pull it out of the ground and the problems will go away.

 

[Nemesis 1]

You guys think the CDs is a scam . Wait till when we find out how these things were packaged. Who ends up with what . That news should be coming along soon . People gona get really pissed.

You can't believe the number of people who are destoying the properity there giving up . The low lifes should have never gotten the loans to start with.

 

[cliftonite]

Originally posted by: Genx87

Originally posted by: Phokus

Originally posted by: Genx87

Originally posted by: Phokus
Free Market ideology wins again.

This isnt a free market problem. It is a lack of govt regulation problem. A free market without regulation is anarchy. Anarchy has never produced anything but more anarchy and instability.

How can a market be "free" when it's regulated :laugh:

The only thing free market nutjobs think the government should have a hand in is enforcing contracts/protecting private property rights. That's all. To say anything else is dishonest.

Do you have any idea what a "free" market is? Free markets are not anarchy which is what an unregulated market is. A 'free"market is a market that allows people to exchange goods with minimal interference but has a framework so the playing field is level and prevents abuse\fraud.

Agreed, there must be a balance somewhere and obviously it has gone awry in the last 10 to 15 years

 

[cliftonite]

Originally posted by: Fern

Originally posted by: Lemon law
Where does this notion come from that AIG has any worth.....
-snip-

AIG has many subsidiaries that are profitable.

It was their one subsidiary, AIGFP, that has the problems. And if Liddy is to be believed it's only 2 of 3 divisions within AIGFP that are problematic (the MBS and CDS divisions).

So, many of AIG's other subs have value, and (again) I think AIG will eventually be broken up and those with value sold-off.

Fern

What would the consequences be of doing that? Instead of propping up a head horse, spin off the good assets and let the rest fail.

 

[Fern]

Originally posted by: cliftonite
What would the consequences be of doing that? Instead of propping up a head horse, spin off the good assets and let the rest fail.

Yep.

The proceeds from the sale of 'good subsidiaries' would go to AIG (holding company) which could, then in turn, pay off the TARP loans. It would then be dissolved.

I suspect this is the plan but (1) they don't wanna dump the AIGFP (bad) subsidiary so fact it ripples through the world's economies, instead they are slowly winding it down now (or unraveling it), and (2) they wanna make sure they get sufficient funds from the sale to pay back TARP money (right now might not be best time to sell them - or anything for that matter, so they'll wait for the market to improve before selling them).

Fern

 

[shira]

Originally posted by: Fern
Do you think our taxpayer bailout money should be paid to those who gambled on CDS?

Do you agree that's what we're doing?

Why is nobody talking about that?

Somebody buys insurance on a bond they don't even own, and we should cover them? These buyers aren't your average mom-and-pop types who didn't know what they were getting into. While the insurance sellers d@mn sure should have know the risk they were taking by "over-insuring' bonds, so should the buyers.
Fern

You're a fool.

Calling a counterparty to AIG CDs a "gambler" is like calling someone who purchases a auto or homeowner's insurance from Allstate or Prudential a gambler. AIG was at the time these CDS were created the biggest insurance underwriter on the planet. And calling counterparties to AIG - a then-triple-A-rated firm - "gamblers" is the height of 20-20 hindsight

These counterparties engaged in completely legal, contractually solid activities. You can no more tell them to "eat their losses" than you can tell ANY creditor to "just go away" and not force a debtor into bankruptcy.

These CDS holders can and will force AIG into bankruptcy if their contracts aren't honored. Congress cannot force good-faith, legal contracts to be abrogated simply because people like you don't like CDS and think buying insurance from a triple-A-rated firm is "risky."

 

[shira]

Originally posted by: jman19
CDS contracts don't get enough attention? Have you been living under a rock?

I'm thinking the same thing. When Paulsen first announced the concept of the TARP, he specifically mentioned that $56 trillion of CDSs were a looming threat.

Of course, $60 trillion (or whatever) of CDSs isn't the actual "exposure," because many counterparties to CDSs were also the underwriters of other CDSs. There are chains of CDSs, where the total face value may be 100 times the actual, net amount owed.

The so-called "notional" amount of CDSs is much smaller than $60 trillion. Seems I read a figure of $1.5 trillion or so.

 

[Deleted member 4644]

I agree 100% that CDS are almost the ENTIRE problem with the economy. I also accept that Clinton and his friends were big in allowing the CDS situation to expand.

HOWEVER, Reagan, Greenspan, Bush (Paulson), and others ALL supported and approved of this deregulation and very similar and related deregulation.

THEY ARE ALL TO BLAME.

Will you come together and agree with me on this?

We need politicians who are willing to accept that WE NEED TO REGULATE companies that can bring our country to its knees. "Growth" and "Capitalism" are worthless if it can all be destroyed by a few hundred greedy men.

I am ALL FOR competition, capitalism, and growth. But the rules need to prevent people from betting with other people money in wildly risky ways. If you want to make wild wild bets, you should be forced to do it with your OWN money and the money of people you deal with on a face to face basis, not some pension fund that you nominally control.

It is time to turn away from a system where the foxes are guarding the chicken pen.

 

[soccerballtux]

Originally posted by: Fern

Originally posted by: cliftonite
What would the consequences be of doing that? Instead of propping up a head horse, spin off the good assets and let the rest fail.

Yep.

The proceeds from the sale of 'good subsidiaries' would go to AIG (holding company) which could, then in turn, pay off the TARP loans. It would then be dissolved.

I suspect this is the plan but (1) they don't wanna dump the AIGFP (bad) subsidiary so fact it ripples through the world's economies, instead they are slowly winding it down now (or unraveling it), and (2) they wanna make sure they get sufficient funds from the sale to pay back TARP money (right now might not be best time to sell them - or anything for that matter, so they'll wait for the market to improve before selling them).

Fern

What guarantees this doesn't happen again with another company? What's to stop another AIG from popping up? Can we argue with free market theories for this? If we tax away all the bonuses of TARP receiving company's CEOs I wonder if it just might work itself out. I see it as a sort of consequence for mismanaging the company. The government is not directly regulating their actions with CDS, but providing plenty disincentive to overleverage (if you overleverage and the economy goes down, you are welcome to stay alive with the help of the government, but you'll lose most of the profits you made on the way up). And so, naturally, CEOs (companies) will push back against shareholders demanding insane profits. It won't be the company meeting regulations, it will instead be a _vested interest_ of the workers to self-regulate. If I'm reading it correctly, aside from the obvious moral problems of breaking these contracts that the workers had with their companies, going forward it should work.

Thanks for posting this article; I had never taken the time to fully look into CDSs. It certainly would appear the AIG money is simply going to pay these off. This is distressing.

Fern what would be your method of gauging the effect of the $300B in Tbonds? Obviously this is clear money printing; but it's hard for me to forecast what kind of inflation we'd be seeing. Is it simply 300B/15T*100%? I guess we could take the money multiplier into effect (once velocity picks up again) and make it a clean 5%. Doesn't sound crazy; if I were the Fed it sounds reasonable.


~~


Fern: here's that link about the German bank talking about attracting talent from the US (talent which now may have lost motivation to work due to a certain 90% tax on TARP employees). I mentioned this in another thread. Unfortunately it's not as direct an invitation as I thought (not to CEOs but rather 2nd tier employees), but it is still interesting. The important part is in the last 5 or so sentences:

?There are three big industries where the US has global leadership: financial services, media and technology. Introducing this 90 per cent tax is like taking one of those industries out the back and shooting it,? said a top Wall Street executive.

In Frankfurt one employee at a US investment bank said the new tax measures would ?send [the US] back to the stone age?.

?Commodity traders are already moving to companies like BP where they can make as much money as they used to,? said another banker at a US firm.

Bankers at Deutsche Bank said it could benefit from the proposed legislation by poaching its US rivals? most talented employees.

 

[Fern]

Originally posted by: shira

Originally posted by: Fern
Do you think our taxpayer bailout money should be paid to those who gambled on CDS?

Do you agree that's what we're doing?

Why is nobody talking about that?

Somebody buys insurance on a bond they don't even own, and we should cover them? These buyers aren't your average mom-and-pop types who didn't know what they were getting into. While the insurance sellers d@mn sure should have know the risk they were taking by "over-insuring' bonds, so should the buyers.
Fern

You're a fool.

Calling a counterparty to AIG CDs a "gambler" is like calling someone who purchases a auto or homeowner's insurance from Allstate or Prudential a gambler. AIG was at the time these CDS were created the biggest insurance underwriter on the planet. And calling counterparties to AIG - a then-triple-A-rated firm - "gamblers" is the height of 20-20 hindsight

These counterparties engaged in completely legal, contractually solid activities. You can no more tell them to "eat their losses" than you can tell ANY creditor to "just go away" and not force a debtor into bankruptcy.

These CDS holders can and will force AIG into bankruptcy if their contracts aren't honored. Congress cannot force good-faith, legal contracts to be abrogated simply because people like you don't like CDS and think buying insurance from a triple-A-rated firm is "risky."

You're wrong. And it looks like you don't understand insurance (risk management principles) or CDS's, or maybe either.

If you purchased CDS on bonds you didn't own, looks like gambling to me. This is completely different different from purchasing auto or homeowner insurance on your car or home.

CDS's differ in significant ways from regular insurance:

1. It's against insurance law/practice to 'over-insure'. I.e., you can't buy a $1 million policy for a house worth $250K. OTOH, CDS's allow you to do that by buying/selling 4 (or more) policies for only one $250K bond.

2. You can't insure property that you don't own. You don't own the home, you can't buy a policy on it, unlike CDS's.

No, they are much different in fundamental respects. And buying a CDS on property you don't own isn't insurance, it's gambling.

Buying coverage on a bond you don't own is a 'bet'. You're betting it will default, the seller is betting it won't. It's not insurance for an asset that you own (in any way).

Fern

 

[Fern]

Originally posted by: soccerballtux

Originally posted by: Fern
-snip-

What guarantees this doesn't happen again with another company? What's to stop another AIG from popping up? Can we argue with free market theories for this?

In spite of what Shira asserts, CDS's are gambling (as explained in my rebuttal to his post]

If you gamble more money than the 'house' can afford to pay-off, you won't get your money if you win. That's what's happened here. Via TARP, the federal government is stepping up to 'back the house' with taxpayer money.

If you make bets you can't afford (and therefor have no intention of paying) that's fraud. "If I win, I'll collect, if I lose, I won't pay". You can also say that they are selling a service they have no intention of delivering on. That's 'fraud in the inducement', usually a felony if egregious (depends on the state etc). This was egregious.

Being chartered as a bank is a privelege and being approved as a casino is privilege. There's a reason the two are different. Banks should not be allowed to play casino unless and until they are capitalized like a casino. Can a casino bet more money than it has? I dont think so.

Whenever banks are allowed to behave as a casino, things have gone "BOOM" in a big way. I remember the S&L debacle (or maybe even two of them).

The solution is not to alow banks to behave as a casino (taking bets) unless they are sufficiently capitalized so thathey can pay (but this would probably mean scaling back sharply on the leverage they are permitted and this would have adverse effects on the economy vis-a-vis a sharply curtailed monetary supply if my thinking is correct.)

Originally posted by: soccerballtux
If we tax away all the bonuses of TARP receiving company's CEOs I wonder if it just might work itself out. I see it as a sort of consequence for mismanaging the company

Although I disagree with using taxation as that kind of tool for government, I could understand the 'rough justice' if they were, in fact, taxing those CEO's etc who caused the mess. But they're not. As in the case of AIG those people are gone. This tax is hitting both those who never worked in these problem areas and those who were brought in after the problem to help fix it. Is this a case of 'right punishment' but 'wrong person'? We try to strenuosly avoid that in our judicial system. Yet here they are blissfully pursuing it?

BTW: Cassano, the guy who caused all the problems at AIG was being paid $1 million month by them after his 'retirement' as a consultant. Perversely enough, even if still there he will NOT be hit with 90% tax under that arrangmnent. How messed up is that?

Originally posted by: soccerballtux
Fern what would be your method of gauging the effect of the $300B in Tbonds? Obviously this is clear money printing; but it's hard for me to forecast what kind of inflation we'd be seeing. Is it simply 300B/15T*100%? I guess we could take the money multiplier into effect (once velocity picks up again) and make it a clean 5%. Doesn't sound crazy; if I were the Fed it sounds reasonable.

I know enough to know taht I don't know the answer to that question. I'm not sure many (or perhaps anybody) really does? I think we're in unchartered waters now, so we'll just have to wait and see how Geithner's 'science project' works out.

I can later see this being studied in finance/economic classes for a long time.

Originally posted by: soccerballtux
Fern: here's that link about the German bank talking about attracting talent from the US...
-snip-

?There are three big industries where the US has global leadership: financial services, media and technology. Introducing this 90 per cent tax is like taking one of those industries out the back and shooting it,? said a top Wall Street executive.

In Frankfurt one employee at a US investment bank said the new tax measures would ?send [the US] back to the stone age?.

?Commodity traders are already moving to companies like BP where they can make as much money as they used to,? said another banker at a US firm.

Bankers at Deutsche Bank said it could benefit from the proposed legislation by poaching its US rivals? most talented employees.

Yep, and it seems an obvious 'unintended consequence of the 90% tax. (I realize the term 'obvious unintended consequence' is oxymoronic - I suppose unless you were a memeber of Congress anyway)

Fern

 

[GTKeeper]

2 points

1) Shira got owned by Fern

2) I mentioned CDSs here before and how they are the biggest problem we are facing. Until we put them on an exchange and force issuers to post margin requirements we will pump enough tax payer money into this black hole to bankrupt the nation.