Greece

[bduke]

Parsley... I think wrapped in lingerie should be a prerequisite... an even
shorter circuit to a man's brain than via the pocketbook is the olfactory
effect of pheromones! So I am told... ;-))

I agree that Brooksley had it figured out, but unlike Margaret, she didn't
have enough clout.

However, had anyone with major influence foreseen the compounding
effect of these financial instruments there would have been a required
recording of them... at the least.

This would have led to limitations on balance sheets... for both parties.

Had Brooksley been able to raise this issue with adequate
substantiating evidence in 2005 or 2006, some financial reporters
would have had ammunition to question the SEC,the Treasury Secretary,
and the CFTC.... the regulators.

These were OTC deals without a central reporting overseer.

No one knew.. or knows.. the total VAR.

Some claim it was probably close to a quadrillion $US.

The overwhelming global stampede to sell structured credit products
was because interest rates were too low for too long.

This volume buried the Swap sellers when the bubble started letting out
air.... i.e. they mostly went broke.

Brooksley must have given up or the press disregarded her.

This is a reality of a democracy.... being right is too often not popular.

BTW derivatives were thought to be "risk managing" according to
algorithmic modeling.

The Quants had it wrong... because of the unknown total Value at Risk.

The value oh hindsight for most... the frustration of foresight for
Brooksley.

I will expect your response to be "properly" wrapped!... LOL

Cheers... Bill

[bduke]

Parsley... I think wrapped in lingerie should be a prerequisite... an even
shorter circuit to a man's brain than via the pocketbook is the olfactory
effect of pheromones! So I am told... ;-))

I agree that Brooksley had it figured out, but unlike Margaret, she didn't
have enough clout.

However, had anyone with major influence foreseen the compounding
effect of these financial instruments there would have been a required
recording of them... at the least.

This would have led to limitations on balance sheets... for both parties.

Had Brooksley been able to raise this issue with adequate
substantiating evidence in 2005 or 2006, some financial reporters
would have had ammunition to question the SEC,the Treasury Secretary,
and the CFTC.... the regulators.

These were OTC deals without a central reporting overseer.

No one knew.. or knows.. the total VAR.

Some claim it was probably close to a quadrillion $US.

The overwhelming global stampede to sell structured credit products
was because interest rates were too low for too long.

This volume buried the Swap sellers when the bubble started letting out
air.... i.e. they mostly went broke.

Brooksley must have given up or the press disregarded her.

This is a reality of a democracy.... being right is too often not popular.

BTW derivatives were thought to be "risk managing" according to
algorithmic modeling.

The Quants had it wrong... because of the unknown total Value at Risk.

The value oh hindsight for most... the frustration of foresight for
Brooksley.

I will expect your response to be "properly" wrapped!... LOL

Cheers... Bill

[bduke]

Parsley... I think wrapped in lingerie should be a prerequisite... an even
shorter circuit to a man's brain than via the pocketbook is the olfactory
effect of pheromones! So I am told... ;-))

I agree that Brooksley had it figured out, but unlike Margaret, she didn't
have enough clout.

However, had anyone with major influence foreseen the compounding
effect of these financial instruments there would have been a required
recording of them... at the least.

This would have led to limitations on balance sheets... for both parties.

Had Brooksley been able to raise this issue with adequate
substantiating evidence in 2005 or 2006, some financial reporters
would have had ammunition to question the SEC,the Treasury Secretary,
and the CFTC.... the regulators.

These were OTC deals without a central reporting overseer.

No one knew.. or knows.. the total VAR.

Some claim it was probably close to a quadrillion $US.

The overwhelming global stampede to sell structured credit products
was because interest rates were too low for too long.

This volume buried the Swap sellers when the bubble started letting out
air.... i.e. they mostly went broke.

Brooksley must have given up or the press disregarded her.

This is a reality of a democracy.... being right is too often not popular.

BTW derivatives were thought to be "risk managing" according to
algorithmic modeling.

The Quants had it wrong... because of the unknown total Value at Risk.

The value oh hindsight for most... the frustration of foresight for
Brooksley.

I will expect your response to be "properly" wrapped!... LOL

Cheers... Bill

[bduke]

Parsley... Fiat money is worthless if we don't believe in it.

Here is my perspective.

Money ... as we know it... is an indication of value.

There is nowhere nearly as much "paper money" as there is deemed value in the
developed world.

When countries phone each other and quote a transactional value they are
swapping balance sheet value.

Countries do have value.. at least some do.

The USA bought Alaska from Russia in 1867 for $7.2 million.

Bank notes are printed to supply "cash" needs... not to reflect the values of
sovereign worth.

"Money" is mostly balance sheet figures of best guess values at date of entry.

This is how leverage is applied. If I have a farm net worth of $100,000 I may be
able to secure credit of $100,000 if I have a good credit rating and can
demonstrate repayment.

Should I borrow the $100,000 I will have a debt to asset ratio of %50 or debt to
equity of 1 to 1.

Very little, if any, cash will be printed.

Leverage has allowed the Western World to develop very quickly, in comparison
to non leveraged societies.

If I had been limited to family wealth for my well being, I would have been living
in poverty... and probably be dead.

And not from a lingerie misunderstanding!

The problem..IMHO.. is the compounding effect of incrementally increasingly
human greed, and the lack of known total risk values.

Societally we are our own worst enemies... but not you and I of course...

We end up paying an unfair share.

I could be wrong.

Cheers... Bill

[bduke]

I apologize for the repetitive posts. Must have something to do
with changing pages.

Sorry folks... wish I could edit.... Bill

I

[parsley]

Responsible financial leaders do not require an
inquisitive media to highlight a potential problem
to the public, in order for their own responsible
scrutiny, risk management, questioning, and
underwriting to trigger.

US banks did not do their job. The banks are still
not doing their job. ..............thus earning an
Irresponsibility label where irresponsibility is due.
Pars

[cottonpicken]

I can't wait to hear what Mr.Bass has to say.He could
seriously lose billions of dollars.

I always thought the bond market mess would give
commodities the liquidity they need but i didn't think
it would happen like this,i thought people would get
sick of watching their purchasing power erode.

Think of all this monstrous debt out there-that
someone owns-and now they can't believe their
insurance on "it" or "it" is safe.

[cottonpicken]

This is going to be interesting.

Rock and hard spot.

If cds is triggered 5 of the biggest banks go down,taking
down god knows what.

if cds is not triggered,those banks make off like bandits,but
somebody is holding the bag.

So many financial institutions will face HUGE right downs on
assets they thought were hedged,but those institutions are
so leveraged they will be insolvent.

Then,which has already started to happened,confidence will
be lost,man o man interesting times.

[bduke]

Parsley.... Brooksley's concerns were.. in 1995... for a non material, new era
method of managing risk ... at that time.

She was too early to resonate with the Regulators because there was so few
deals being consummated.

Remember that interest rates were not predicted to be so low for so long.

My point is where was her warning in 2005? Perhaps she did try to alert the
regulators and markets but wasn't deemed credible..

Regarding the banks not doing their job... I agree.

The changing of regulations in 1979 to allow US Schedule A Banks to do
proprietary trading has changed the focus of banking.

Now the "Volcker Rule" is being discussed to revert back to old style regs.

However, recognize that the politicians are counting on banks to help their
countries survive.

Bank of America purchased Countrywide Mortgages in 2008 for $4.1 billion
in stock and has been in duck soup since.

The deal was "encouraged" by politicians.

Hindsight can be more accurate, but of little benefit... especially when
circumstances change.

Your frustration is certainly warranted... IMHO.

Cheers... Bill

[bduke]

Cottonpicken... IMHO .. You have it analyzed.

Although it isn't only investment Banks which sell derivatives.

Some Corps specialize in OTC deals... a few that survived 2008.

Haircuts are inevitable... and will likely include a few scalpings.

I would bet that the US banks survive, and the bond holders
including European Banks will be hurting.

I expect French and Italian Banks will need some propping up.

British banks will be relatively unscathed from Greece etc... they
have their own issues in GB.

BTW the London Financial business is 17% of GB's GDP.

Interesting times indeed.

I could be wrong.

Cheers... Bill