This page has been archived and commenting is disabled.
Explaining Derivatives, And Goldman's Dominance Thereof, In Four Simple Charts
Attached are several charts used to explain to confused politicians all they need to know about the biggest ponzi scheme market ever created (synthetic derivatives), how these derivatives are created, how the leverage attributed to just one asset can result in infinite amplification of risk, and how Goldman is in the very middle of a web which encompasses tens if not hundreds of trillions in derivative counterparty exposure with virtually every single other financial company in the world.
Amplification: this explains how you take a small pool of
assets (in this case mortgages) and increase the bettable risk almost to
infinity courtesy of synthetic products like CDOs which are nothing but
side bets with an unlimited cap on the total risk exposure. The
original mortgage is cut up into tranches, which are subsequentlly split
up into CDOs, whereby risk can be held, sold off, or side-betted via
CDS (which is what AIG would be doing by selling CDS on milions of
assorted CDO tranches). In the example below the Glacier Funding CDO
2006-4A C has an original value of $15 million which trough
CDO-intermediated amplification, or process in which bits and pieces of
it are repakcaged in various synthetic afterproducts, ends up being $85
million. In theory there is no limit to what the total amplified value
could be, as synthetic products by definition are created out of thin
air, and just need a willing buyer and seller.
Deal Creation: For those who have not spent hours poring over the Abacus org chart, this is a summary of how a traditional CDO was structured and subsequently insured (incidentally, this is not the infamous "John Paulson" Abacus deal for which Goldman is currently being sued). Of particular note here is the box in the lower left, the CDS issuers, AIG, TCW and GSC, who were the dumb money, or those infamously collecting pennies before the housing crash steamroller. As the chart shows, they were collecting $3 million a year in CDS payments, and stood on the hook for $1.8 billion in case the CDO collapsed, or specifically if the underlying reference assets stopped generating enough cash through specific attachment levels.
Leverage: here are the key counterparties on the hook for just the above deal, Abacus 2004-1. No surprise, the biggest counterparty, with total downside loss is AIG, at $1.76 billion. The running annual CDS premium payment? $2.1 million. As the exhibit notes, in the end "Goldman negotiated $800 million from AIG." Other losers included TCW and GSC, and Abacus itself via secondary market holders.
Counterparties: The money chart, this shows who Goldman's key derivative counterparties were as of June 2008. While oddly enough AIG is not on this chart (potentially as this is pro forma for the bailout), it shows just what a great web of interconnected synthetic exposure derivatives create. As of this snapshot, Goldman had $20 trillion in notional counterparty exposure. This number has since ballooned. It also shows that the collapse of any individual actor in this maze would very likely result in the collapse of the entire financial system. While we do not know whether the notional depicted is gross or net, we are comfortable that the $2 trillion in Interest Rate Product counterparty exposure between Goldman and JPM and RBS (for example) would be sufficient to blow up either of these parties should the interest rate complex move violently in a direction and amplitude presumed impossible by either firm's VaR models. We are amused to note that Blue Mountain, a hedge fund, has $590 billion in counterparty exposure to Goldman yet no discount window access. Same goes for Citadel in Equity Products, which incidentally we learn is Goldman's largest counterparty in this category. In the very much maligned Commodity Product category, Goldman's key counterparties are Morgan Stanley with $96 billion, Barclays with $69 billion and Tempo Master with $55 billion, etc. So next time you wonder who aside from JPMorgan is writing all those synthetic gold shorts out of thin air, now you will know. Yet the most notable take home from this chart is that courtesy of its extensive network, Goldman knows full well just how every single bank and hedge fund is positioned, and can easily make prop trading decision based simply on counterparty exposure (Goldman tracks every single trade inception, transfer and novation with all its counterparties to know up to the minute who owns what). Welcome to completely legal frontrunning.
via FCIC
»
- 43086 reads
- Printer-friendly version
- Send to friend
- advertisements -
Merely conjecture/opinion on my part, if that is what you meant. It happened to me, too, and I am all too aware of how accidental the find, how primitive the tool. The crucial difference being, my method does not threaten human civilization with a "move back 200 years" Community Chest card.
My (admittedly poorly informed) point was based on /inspired by BP's recent retaining of GS and its smilarly endowed 'competitors' - as another poster put it, to prevent them from shorting them through the floor (whether through derivatives or the 'old fashioned way'). I'm just guessing that even one of the first such credit derivative deals - if large/complex enough would have started lifting the veil of opacity about the participants - the first drop of blood in the water that drew the sharks. GS realized this was a surefire way to make money on multiple trips within the same transaction AND gain untold leverage over everyone else, clients and governments included.
Great idea on the movie pitch; though -- but didn't your avatar already have a similar role in AP?
Murders and executions. Easily confused, happens all the time. Was more thinking that Jonny Lee Miller/Angelina Jolie cult classic "Hackers", but both work equally well. Why not both, starring all three? Not like it could be any worse than T3 or Tomb Raider...
Agreed re: GS. Any kind of structure where market participants are required to not act in their best interests so as to increase the expected payout require a certain degree of enforcement so as to ensure compliance. Sure, OPEC sets quotas, but is that going to stop Nigeria from bleeding the shit out of their wells? Of course not, OPEC has little means of enforcement. But if by bleeding the wells not only would Nigeria blow up, but the rest of OPEC would be taken down with it...well...what we now have is competitive cooperation...
Not a way to make a living, if you can hack it...
They might be IQ wise but stupid as shit. They got caught.
IQ is a measure of conformance to the System, of the ability to serve the System. But, ironically, that very exceptionalism results in them KILLING the System. So, how wise is That?
Or the shorthand version: Given enough rope...
OK, replace IQ wise with with score high on IQ tests. All the abilities to induce and deduce in algorithmic fashion don't take into consideration the fat tails that create the largest changes. Hence their lack of moralistic ecobalance into their risk management systems will contimue to insure their demise. Their has to be losers on the other side of every trade. The over leveraged squid destroys its prey leaving nothing for future feedings. The whole system is doomed without controls on leverage.
I'm going to call bullshit on your whole "lack of moralistic ecobalance" or whatever the fuck that is. Moral hazard isn't the unforseen consequence of trying to affect a specific goal. Moral hazard is the hazard of introducing morals and the dead weight costs to society as a result of inherently flawed policies. If there's one thing that should be abundantly obvious to you after having been here a while, it's that everyone "talks their book", and more often than not when faced with certain doom, drinks their own kool-aid. The fat-tail risks were known and were published: as a finance undergrad putting myself through school slinging coffee, even I had customers coming in warning me about the secular bear market and the impending housing crash within the next decade. In 2001. Avoiding a whole discussion on hindsight bias, I will say this: in any given transaction, how easily are you able to define who is the buyer and who is the seller? For as much as these derivative products were spread like candy at Halloween, there was just as much liquidity being sold to the dealers. Or to put it another way: at what point does the heroin dealer become a heroin provider?
At the end of the day, as long as the user understands the risks and that, in the event that they do fuck up and will blow up, no one will be there to bail them out and that further no one is looking out for their best interests except themselves, the system works just dandy. Removing but one transaction vehicle does absolutely nothing to abate the profit motive for any kind of product, be it financial, pharmaceutical, or otherwise. Only when faced with the certainty of death will participants take responsibility for themselves....
...which is a guaranteed way to never be elected to public office, and where we find ourselves today. So it goes.
"Moral hazard isn't the unforseen consequence of trying to affect a specific goal." I disagree with your premise.
They created the market and policed it.They should have realized the devastation these instruments could cause to the parties they conned for profit through lies and misdirection. I would consider that moralistic bullshit is a matter of semantic interpertation, and for me contains an ideological philosophical element related to Buddhism. Everything being connected. I am not going to try and convert you or degrade your approach, just recognise it as another way of looking at things.
However, I would argue that fat tails by their very essence are not seen as a big a risk to the party experiencing it, or it wouldn't be the black swan it ends up being. GS didn't foresee the mortgage problem soon enough and was late to the CDS party, therefore it was a fat tail for them, but not for the few that did see it coming by buying CDSs early.
*** ATTENTION TRADERS *** 9:10pm EDT
The props have left the ES market! ... tiny Bid/Ask quantities speak to major player withdrawal ... anything can happen now.
Interesting at 10:35pm EDT, it appears that prop action is now down with large ask sizes. This may be a classic suck as a prelude to the normal mash up?
OUCH!
http://finviz.com/futures_charts.ashx?t=ES&p=m5
Pretty:
http://finviz.com/futures_charts.ashx?t=GC&p=w1
And now the curtain closes. Thank you for my $bonus$ - signed, G$
Wow. Nice work TD. I'll have to read this 3-4 times to get it all.
The complexity of this schema is mindboggling. Almost as though it's a monument to the financial creativity that hatched it. In other words, if we can think it, we can make it. And we can make it work and make a ton of money. I wonder if any thought went into the downside.
Sort of like the atomic bomb. And I'm not slamming America here. The Soviets were hot on the trail too. Now everyone wants one! How much thought are we giving to the downside.
Not much. The cliche that keeps rolling around in my head is, "it's the way of the world".
So all of this will likely end up burning the developed world very badly. Then we'll lament our mistakes and lack of foresight. A generation will suffer and pass. And then, likely, we'll do it all over again.
It's the way of the world.
Amazing these were produced by the FCIC.
My theory is that GS takes the fall but the House of Morgan gets away scot free; as in the '30s and ever and for always (?).
Where is Brooksley Born when you need her?
Somebody needs to cut that squid off of the face of AIG already.
Those charts show clearly that it is all contained and well managed. What's all the hub bub, bub?
A couple of observations
1. Most people here seem to think these diagrams were created by TD or others at ZH. They were actually posted today by FCIC at http://www.fcic.gov/hearings/06-30-2010.php
2. The diagram of GS counterparties shows notional amounts which isn't a particularly useful thing to show and is certainly not a good measure of risk (so, for example, AIG isn't on the diagram). The reality is that major institutions like JPM and GS that mark their books daily etc have relatively little exposure to each other.
A single observation.
1. Most people here can read. See the end of the post: via FCIC.
Missed it. So shoot me.
So according to you AIG had no gross notional exposure with Goldman? Also, pray tell, what happens when you have a Lehman event, and reference bonds go from 95 on Friday night to an open of 20 on Monday (and CDS goes from 450 bps to 80 pts upfront, which on a billion in CDS at a DV01 of $200,000 (assuming generous convexity) is... how much again?). Is a 75% loss in gross notional not sufficient exposure for you? Maybe you still rely on AMBAC for wraparound insurance? You are correct though, risk management is overrated. After all the government will bail out every idiot who trades CDS and doesnt realize that gross in fact can very well be net. Oh and taking the 1 hour JPM CDS trading crash course does not teach one all, shocking as it may sound, about trading CDS.
No, I'm saying that GS notionals with other counterparties are so large that their exposure to AIG doesn't even make the top 10 (which is what these diagrams show). If this diagram truly showed "risk" then AIG would probably be #1.
You might just be confused, otherwise you worded your musings poorly.
Hope this helps
http://blog.creditlime.com/2009/10/26/gnv_vsnnv/
Bwaahaha; there is no greater insult than to use the word AMBAC when addressing someone.
AIG was bailed out for $180 billion, why does the chart say $1.76 billion? Can someone explain?
They are just showing one of the many tranches that AIG insured. The 1.76 b represents one deal they insured.
This was merely one instrument (Synthetic CDO ABACUS-2004-1) out of hundreds/thousands for which AIG ended up being on the hook. IMHO only.
thanks for the replies.....
Rube that I am, I continue to believe (and this article supports my belief) that the reason the derivatives mess is not the subject of any LE or Congressional inquiry is because it was and remains the basis for the leverage that was necessary to keep the bubble inflating. As the marginal utility of debt continued to decline, ever-increasing levels of leverage, above the "normal" leverage that is possible through fraudulent-reserve banking, were necessary to keep the apparent money supply growing. This is the reason why derivatives, especially CDOs, CDS, and puppydog-harmless IRS are allowed to continue to exist. It's the same thing as printing money, only cleverly obfuscated, hidden in plain sight.
"The system doesn't collapse, but evaporate." And that can take a while and be inconsistent in the process. But it has to happen. Credit money requires more and more credit to be created in order to survive, let alone produce any profit.
http://www.creditcontraction.com/images/affiliate/Great-Credit-Contracti...
In an ironic twist, the derivatives accelerate the bubble burst and the inevitable defalationary spiral. The algos and naked short selling derivatives will get the job done a lot quicker than just printing money.
Algorios-the only cerial killer that eats you when not fed by the Fed.
Bingo! You got it, brother.
No one, and I mean no one, seems to be able to trace this back to our federal government. The catechism taught @ ZH is that Wall St owns our representatives. Wrong, wrong, wrong! Wall St exists @ the behest of our federal monolith.
Here's a real straightforward & easy to understand analogy: think Indian gaming. Assume you're a tribe with sovereign control over a specific geographic region. What do you know about running a casino? Nothing. But, for the simple expedient of skimming 10, 20%+ of the take off the top, you can simply outsource the entire operation to a crew that does know how to operate a gambling operation.
There was an excellent analysis further upstream of how derivatives proved to be a foolproof mechanism for monitoring & measuring market determinism. I ask, how is this any different from the numerous listening satellites, stations, etc the NSA employs to collect & analyze communications? Answer - there isn't ANY!
Look, the Fed, Goldman, et al operate at the leisure of the W/M-IC (welfare/warfare industrial complex). As long as they are able to drive the economy via bubbles, derivatives, etc to both generate taxes and enable governments entities at all levels to borrow, both of which support our global military machine & access to subsidized imports (not just cheap Chinese junk but oil anyone?), they are going to be protected.
Poor Denninger keeps calling for the cops, but he doesn't seem to realize the reason there aren't any prosecutions is that the government is the master criminal behind the entire operation.
There would be 10,000 bankers in jail tomorrow if the US determined they were no longer of any use. That is why they operate with impunity - they are simply agents acting under the aegis & authority of the central law giver. In effect, they are doing "God's (mammon's) work".
But there's a hitch: the entire game needs some sort of underlying driver to move the pieces. We've enjoyed an energy subsidy for 150 years. Take this away or diminish it at some level, and the entire edifice begins to creak.
So, back to the Indian gaming analogy. You've had a sweet thing going, but now the factory down the road that supplied most of your customers is shutting down. What are you going to do in order to survive? Remember, the dudes you outsourced the gambling operation to are completely expendable.
This is what the W/M-IC is facing - what to do when Wall St is no longer useful to their longer term objectives.
I think that the co-dependency is clear, but I'm still not so certain that Wall Street exists at the pleasure of the govt or whether it's the other way around. Actually, it's all the same face. Just as much as govt needs Wall Street to funnel money to it (skim), Wall Street needs the govt to give it the sense of legitimacy, to provide it with "protection."
Two sides of the same coin, that being concentrated power, which is guaranteed to blow up (Mother Nature says so, as she's the only one with legitimate rights to concentrated power).
AIG really didn't do their math, did they ?
Did they have to?
AIG _IS_ the key. It's the link between the govt and Wall Street. One only need look at the beginings of AIG. If you ask me, AIG is The money laundering front to "The Secret Government" (refer to Bill Moyers' video by the same name). Somewhere, and I really don't care to waste brain cells on this stuff because it's all going to blow up anyway, Citi is also key: has been used to pump up the markets (maybe it's shown here in all of this info, I don't know- like I said, I value my brain cells too much to burn them out on all of this).
I just realized that picture #4 is a beautiful illustration of Exter's pyramid.
Wonder where all those GS bonuses are going?
As posted above:
http://www.creditcontraction.com/images/affiliate/Great-Credit-Contracti...
Call your congressperson for free at the Capitol Switchboard:
1-866-220-0044
1-877-851-6437
1-800-833-6354
1-888-355-3588
1-866-808-0065
1-877-762-8762
1-800-862-5530
Spam anyone?
I'm more a corned beef guy. Like GS, I spend enough time wallowing in the filth with swine.
Can we lay strips of venison on the empty car pool lane of some abandoned superhighway yet?
P.S. I avoid pig because of their high intelligence and so on (they can play video games for cuss sake), I'm horribly empathetic to the plight of the farmed pig. Want some beef raised right? http://www.rockymtncuts.com. Seems decent. Will place an order with them soon.
Here is the Chart they need to understand:
http://williambanzai7.blogspot.com/2010/06/market-trajectory.html
Astromony as the new technical anaylsis?
Astrology shows the dow GOING TO 30,000.
On May 4th I called the end of the March 2009 bear market rally.
The proprietary indicators I use in my technical analysis can identify trend changes before they occur.
http://stockmarket618.wordpress.com/about
It would have been interesting for a hedgefund to buy a bunch of synthetic CDOs based on one real crappy one after the housing market started crashing. Then they could go in and pay off everyone's mortgage in the original CDO, thus making all the synthetic CDOs instantly fully valued.
The four graphs could be seen as operant conditioning: uncontrolled stimulus and uncontrolled response, leads to controlled stimulus- uncontrolled response, an uncontrolled stimulus is coupled with with a controlled response, and suddenly you have controlled stimulus/controlled response.
The developing scandal of Foxconn and its defenders such as corporate outsourcer Steve Jobs brings to mind JS Kim’s warning that “globalization and the fraud of our global banking system has now, in 2010, washed upon our shores."
Kim, managing director of Smart KnowledgeU warned that “the citizens of many Western nations may soon be engaging in the same morality battles against the financial oligarchs that Zapatista leader Subcomandante Marcos has engaged in on behalf of the citizens of his country (Mexico).”
Now comes Foxconn with the stories of its abuse of workers so bad that it has caused a line of suicides—a result, IMO, of oligarch greed at home and abroad.
In the wake of the worldwide media attention of these employee suicides and sweatshop working conditions, Steve Jobs personally visited the company’s Chinese factories, according to Mobile Computing News, and assured the world that it was actually a “pretty nice place,” with swimming pools, movie theatres and restaurants to boot. (JonT on ShenZhen Post reports from an assembly-line worker that she never has seen such a facility, doesn’t know where it is, and if it does exist then it would be for upper-management and not for the employees).
Because all of this is coming out now, Foxconn International Holdings Ltd., the world’s biggest contract maker of mobile phones, declined 6.9% in the past few hours and shares of Foxconn are down about 44% so far this year. The problem is what are these companies going to do about all these orders going in?
Foxconn Technology Group, with its main plant operating out of Shenzhen, China, has 300,000 workers there and about 800,000 employees in all of China. It is hands down the largest manufacturer of electronics, computers and computer components in the world. It produces items such as the Mac mini, iPod, iPad, iPhone, Dell Computers, HP motherboards, Wii, Xbox 360, Playstation 3, Amazon kindle, and Cisco Equipment, just to name a few.
And it’s looking like Foxconn’s troubles are continuing, and Apple’s by association, as the latest reports indicate up to 100,000 students have been “ordered” to report to scandal plagued Foxconn factories for work, or face expulsion from school, according to MCN.
Not only that, says Reuters, “Together with its parent Hon Hai, it is moving much of its production away from China’s increasingly expensive coastal regions to cut its operating expenses, a process it started in 2008.
“Workers at Foxconn’s giant Longhua factory north of Shenzhen said the firm had notified them that it wanted to shift 300,000 of around 450,000 workers from several Shenzhen plants to a massive new factory planned in central China.”
It may be difficult to “shift” 300,000 free individuals in a free country but, of course, it’s “no big deal" to shift 300,000 “human resources” around on a global plantation.
Maybe it's time to take back America from the outsourcers and dethrone the international banking oligarchs by ending the Federal Reserve and the cabal’s control over the world’s reserve currency—and thus all commerce and industry--before it’s too late.
Oh, so you're advocating that American's get those crappy jobs?
The "outsourcing" has been more about automation than shifting jobs. Sure, there has been some jobs shifted, but automation has been the real culprit (yes, Karl Marx was right on this count).
Outsourcing Not the Culprit in Manufacturing Job Losshttp://www.automationworld.com/webonly-320
Heaven sent info Tyler--
so there is no reason now, for our elected officials to not immediately provide the public with honesty and a promise to undo the legislation that legalized so much that is really criminal (most obvious example for the public is the revocation of the Glass Steagall Act which legalize gambling with peoples' deposits. )
NO MATTER HOW YOU SLICE IT, PEOPLE MAY NOT GET ALL THE DETAILS, BUT THE AMERICAN PUBLIC KNOWS THAT THEY HAVE BEEN ROBBED AND CONTINUE TO BE ROBBED AND OUR COUNTRY HAS LOST IT'S INTEGRITY (CURRENCY VALIDITY) NOW THAT IT IS OBVIOUS THAT WE LIVE IN A BANANA REPUBLIC.
The amazing part is that Goldman managed to negotiate these deals.
Obfuscation, jargon, chutzpah and the rest of the world's perception that they have expert (inside) knowledge is what gets them into that selling position. That and your pension managers greed for "yield enhancement".
hmmm..looking at that GS counterparties chart...FED is missing...
A good collection of interesting charts illustrating the complex CASINO although clearly out-dated should have shown the hard working american public as the CORE COUNTERPARTY at the centre of THE WEB OF DECEIT and not Blank"Fiend"s Goldman Sucks.
Yo GS SQUID.... a missing peice from your COMPLEX FINANCIAL JIGSAW PUZZLE....i found it under the table.....Phew....,
http://upload.wikimedia.org/wikipedia/commons/b/bf/Pyramid_of_Capitalist...
Now, doesn't that look pretty!
Congrats...TD scores another...and much needed TD....
..............
Let's make this simple....
Suppose one has a manufacturing plant that makes widgets...
The plant paper = $1 Billion
Normally....one would have to have $1 Billion to sell
short the paper....
But here comes derivatives....One can now create
the ability to sell short many times $1 Billion....for far less than $1Billion....
And indeed a money windfall is guaranteed...particularly when there is a negative report....and especially when one can see all of the cards...
This is what GS is all about....Once one positions oneself with the unsuspecting regulators....one is in a position to legally steal money...
There is nothing wrong with a $1 Billion/ $1Billion shorting mechanism....however the current system which allows for "legal stealing" has to be set straight....
This is not winning by intelligence about widgets fundamentalism....
THIS IS LEGAL STEALING BY POLY CAPTURE....
POLY CAPTURE FASCISM......By blending in the SEC/GOVT step to higher pay jobs revolving door....
Unfortunately, the problem is not that they don't understand this . . .
"Attached are several charts used to explain to confused politicians all they need to know about the biggest ponzi scheme market ever created (synthetic derivatives), how these derivatives are created, how the leverage attributed to just one asset can result in infinite amplification of risk, and how Goldman is in the very middle of a web which encompasses tens if not hundreds of trillions in derivative counterparty exposure with virtually every single other financial company in the world."
GS bitchez!!!
Yes, it's based on growth. Growth of the money supply.
I think they'll find a fudge to keep that money supply growing.. they'll find a way to outright justify monetization. We've already had QE1... continuous QE will be the order of the day.
No increase in productivity with increasing money supply and if the bondholders dont like it I have some QE money for them.
They simply will not allow deflation.
I'm going to send out the following spammy, chain letter.
Hello Friend.
If you have about 20 minutes to spare, take the time and read
http://www.zerohedge.com/article/explaining-derivatives-and-goldmans-dom...
Make sure to pull up all the charts and graphs (there are 4 of them).
Don't get frustrated if most of what you are reading makes no sense. I think a person has to outside this vicious loop of modern finance to experience a proper level of astonishment.
Think of the term "creeping normalcy". The pigs running our country--politicians and Wall Street financiers alike--have accepted amplification of risk in small increments, and therefore are desensitized. They are mere "boiling frogs". Or, better still, they are the rats who had unfettered access to the food pellets and they gradually ate themselves to grotesque obesity. We, on the other hand, are merely plump and mildly satisfied turkeys on the third Wednesday in November. Of course, each group will meet the same end, but the frogs don't get to experience the terror of the blade. Sometimes it's the heads out of the sand that are willfully ignorant.
Spend some time with this post. My bet is that intuitively, you'll experience some profound insights nonetheless.
As an initial foothold, keep in mind the following:
1. This is just a picture of Goldman Sachs. Yes, it is a major player, but there are several major players.
2. This picture is from June of 2008. By every metric, this type of exposure has only increased since then; and not by a small increment.
3. If (when) one of these domino counterparty should fall, the others will follow just like the metaphor suggests.
4. If 98% of this risk is unwound successfully, we would still have a major depression on our hands.
5. Oh yeah, and one more last one. There's an entity called "Blue Mountain Credit Alternatives Master Fund, L.P." with $590 billion in exposure to Goldman Sachs. If Blue Mountain has $590 billion to Goldman Sachs, then it's reasonable to conclude there are other entities with hundreds of billions in exposure to Blue Mountain as this is how the game seems to to work. ["Yes, I've ingested a significant amount of that stimulating crystal meth. But what you're not getting is, I've offset this with an equal amount of some relaxing heroin. I'll be fine! Now, if you'll excuse me, I'm just going to curl up for a spell on that cool, refreshing marble tile floor in the bathroom."]
It's quite amazing, isn't it: If this unknown hedge fund fails, our entire economy and our entire way of life might just be in peril. And it's not an exaggeration....anymore than the LTCM failure in the late 1990s shook our entire system to the core. Wars could result. Famine. Millions of deaths. All from the $590 billion piece of straw that is to our financial system, what a grain of sand is to a heap in the Sorites Paradox.
The half-ton rats are out of pellets. Next up on the menu: Turkeys.
The terror of the blade awaits.
Oh wait, on second thought--this could never happen to us. Never mind. Hope your 4th is fantastic.
ZH knows better but continues to use notional value as the standard for measuring risk, with predictable finger-pointing and hysterics. Sometimes you guys sound like Democratic congressmen. I'm all for exposing evildoing by the market giants, but arguing the case based on misleading statistics undermines the credibility of the argument.
1. In the first chart, are the amounts shown in the center column the amount of the CDO based on the underlying security or the total amount of the CDO? If the latter, there may in fact be no amplification - but the chart isn't clear about that.
2. In the last chart, the amount of counterparty risk is not the gross notional amount between the two parties. First, as we know, the notional amount is not the same as the amount of money at risk. Second, as derivatives are bought and sold by traders among each other, offsetting positions are netted and so reduce the real risk between them.
The actions of the big banks would suggest they are looting. Under what circumstances do people loot? Usually during and after the shit hitting the fan.
How is it that everyone seems to have missed this? TSHHTF people!
There seems to be no concern for what the world will look like after they are done, their only concern appears to be, to take as much as they can carry. We are all in deep shit.
Laws don’t seem to have any effect on Blankfein and other purps; perhaps the judicious application of one of these would change their attitude.
Just an idea…
EURUSD buying support detected for some time now, has returned again and the daily chart is now neutral to bullish.
http://stockmarket618.wordpress.com/about
TD, Great article and diagrams/charts. You make ZH a great place to gain knowledge.
http://www.youtube.com/watch?v=sJYDXQjk1iU
.
musical break.
now back to the regular programing, reprogramming,
deprogramming. oh yea, being screwed and screwing
other people with nothing of importance at stake as
all integrity was dissolved in fraud years ago. call it a cultural
trait , norm, or a way of life thing. maybe even or almost
a religion or two, certainly an "institution". if the shoe fits....
at least there are unintended consequences and karma.
and time.
"c'mon girls..." b.c. and it swings....
ps. these are weapons of national and sovereign annihilation.
the financial industry is taking over/indebting all nations to itself
and using the sovereigns' money backing legal authorities to do it,
and as the officials have all been paid off to screw their constituencies,
populations, it is proceeding unabated to our ruin.
first systemically important bailouts then
austerity and fuck the elderly, wounded and poisoned; and the children
god bless their hearts, let them learn about life on the street.
.
that is what they are designed to do, derivatives. whether they are loaded
or not, these weapons of mass financial destruction, the people
may never know, but we know they are aimed
directly at our brains and on those grounds alone the individual
persons wielding them should be incarcerated, at least. it should have
happened a long time ago but the criminal elite choose their justice/s.
judicial temperaments.....and their weapons and ammunition.
me, i just watch and wait for the inevitable turning, that commentary
and links..
http://maxkeiser.com/
.
when you have no time and no capacity to influence the world
around you, you are dead. if you still miraculously move about
you are a zombie. that is the effect of derivatives on national economies.
they kill the environment to the inhabitant of the environment through
artificial price manipulation and opacity. control is transferred to a remote
location and the socio economic "object" is commodified and raided,
sold in a the market like pork. but they need the quisling political,
journalist and "investing" classes to dress it up as something else,
maybe porn of some kind?
eco porn, disaster porn, frequency/velocity porn, left/right/ center political
porn..... or regular porn
with lipstick on a pig. maybe that isn't "regular" but you know what i mean?
.
now, back to your regular program, apologies where needed.
ps (again)
notice how municipalities, states, tribes, lobbyist etc... think
building casinos is the way forward to get "us" out of this mess.
like the last and perfectly dismal logical conclusion to round the
square peg; repeat, dismal. wonder what the phd's and justices think?
did i mention the "deal" is to destroy the world to create it in the image
of self, the market maker's self. do they realize how ugly that world is
becoming/is? probably not. it is all good and getting better........
more qe to the financial sector and more cow bell!
casinos, coffins and tents, the future. go market makers, make it happen.
and yes the public must participate and they will as they/we are zombies.
go to most any urban public space and look. the only non zombies are
under watchful eye, everyone else is doing the zombie blend.
just a thought. so easy to end it.... begin it? just one thought away......?
Certainly a lot of details like that to take into consideration. Thanks windows vps | cheap vps | cheap hosting | forex vps