http://finance.yahoo.com/news/Obama-Consumers-lose-if-apf-1043447495.html?x=0&sec=topStories&pos=2&asset=&ccode=
Neither party is looking out for you.
Congress exempts, on both a state, and a federal level, any type of regulation for trading derivative because the people trading them might not like it and leave, and that would take away a competitive edge.
So the big car wreck happen because boys will be boys and don't always know their own limitations or at least that's what they told us was the reason for the 2008 crash anyway. ( I have serious doubts, about the "intent" of those "boys").
So congress hims & haws around and coughs up a package that has a special condition for the good ole "boys", to be able to by pass the rules.
Because what ever Wall Street wants Wall Street get, courtesy of our Congress, no matter what the consequences are, to Main Street.
President Barack Obama says consumers would lose if Republicans regain power in Congress and try to roll back his hard-won Wall Street overhaul.
He says the GOP's promised repeal of the law would mean the return of a financial system whose near-collapse led to the worst recession since the Depression.
"Without sound oversight and commonsense protections for consumers, the whole economy is put in jeopardy," Obama said Saturday in his weekly radio and Internet address.
http://works.bepress.com/cgi/viewcontent.cgi?article=1010&context=willa_gibson
This paper discusses the efficiency of proposed Congressional legislation to regulate the Over-the-Counter (OTC) derivatives market in light of the provision in the legislation that effectively exempts customized OTC derivatives contracts from clearing requirements and exchange trading. The exemption allows OTC derivatives dealers trading customized contracts to continue trading in the same opaque markets in which they engaged in rent seeking behavior that almost led to the collapse of the financial markets. The manuscript discusses why Congress has proposed these exemptions, why the exemption creates economic inefficiencies
Systemic Risk Posed by OTC Derivates Trading
OTC derivatives trades were largely exempt from state and federal regulation in 2000 by Congress’ enactment of the Commodities Futures Modernization Act of 2000.11 Congress exempted OTC derivatives from regulation because it was concerned that regulation of the market would cause OTC derivatives business to migrate to foreign markets with less regulation causing the U.S. to lose their competitive position. 12 Yet, many have pointed to Congress’ decision in 2000 to exempt such transactions from regulation as a significant factor contributing to the Great Recession of 2008
Showing posts with label derivatives. Show all posts
Showing posts with label derivatives. Show all posts
Saturday, October 23, 2010
Wednesday, October 20, 2010
Under Siege at the CFTC
http://www.businessweek.com/magazine/content/10_43/b4200039780126.htm
Lobbyists: the corporate elite making sure their position is bought!
Now a lawyer at Winston & Strawn, with Goldman Sachs (GS) among his clients, Malyshev says he's more likely these days to encounter a small regiment of people lining up to get into meetings where they hope to influence the biggest rewrite of Wall Street rules since the 1930s. At times the line of lawyers, bank executives, and hedge fund managers stretches out the door of the small waiting room in the commission's black marble lobby
"The number of people that have come in requesting to be exempt from the law or to have the law delayed has literally shocked me," says Bart Chilton, a Democrat who is one of the agency's five commissioners. "A lot of folks are having problems coming to grips with the fact that they do have a new law and will have to change their business models."
Chilton says he found himself confronting the same lobbyist representing three different companies in the space of two weeks. In each meeting, the attorney argued that his client was exempt from the law or that implementation ought to be put off, says Chilton. "The volume and intensity of the lobbying is unprecedented in my experience at the agency."
The bottom line: Congress gave regulators wide discretion to regulate derivatives, causing the CFTC to be besieged by lobbyists
Lobbyists: the corporate elite making sure their position is bought!
Now a lawyer at Winston & Strawn, with Goldman Sachs (GS) among his clients, Malyshev says he's more likely these days to encounter a small regiment of people lining up to get into meetings where they hope to influence the biggest rewrite of Wall Street rules since the 1930s. At times the line of lawyers, bank executives, and hedge fund managers stretches out the door of the small waiting room in the commission's black marble lobby
"The number of people that have come in requesting to be exempt from the law or to have the law delayed has literally shocked me," says Bart Chilton, a Democrat who is one of the agency's five commissioners. "A lot of folks are having problems coming to grips with the fact that they do have a new law and will have to change their business models."
Chilton says he found himself confronting the same lobbyist representing three different companies in the space of two weeks. In each meeting, the attorney argued that his client was exempt from the law or that implementation ought to be put off, says Chilton. "The volume and intensity of the lobbying is unprecedented in my experience at the agency."
The bottom line: Congress gave regulators wide discretion to regulate derivatives, causing the CFTC to be besieged by lobbyists
Friday, July 2, 2010
Warren's way
http://thehill.com/homenews/senate/106881-dodd-lincoln-ease-worries-on-buffett-wall-street-provision
I'm wondering if Senator Dodd has placed a guarantee in writing that the American taxpayer will not be held responsible for the financial responsibilities of any past written derivative contracts should they malfunction.
Democrats have taken steps to ease concerns raised by Warren Buffett about Wall Street reform’s impact on trillions of dollars in existing derivatives as legislation nears the finish line.
On Wednesday, the day the House passed the overhaul legislation, key Senate Democrats wrote a four-page letter clarifying the legislation’s impact on the $600 trillion derivatives market that many blame for exacerbating the financial crisis.
Senate Banking Committee Chairman Chris Dodd (D-Conn.) and Agriculture Committee Chairwoman Blanche Lincoln (D-Ark.) wrote that potential new capital and margin regulations meant to offset risk in some trades should not apply retroactively to existing derivatives.
I'm wondering if Senator Dodd has placed a guarantee in writing that the American taxpayer will not be held responsible for the financial responsibilities of any past written derivative contracts should they malfunction.
Democrats have taken steps to ease concerns raised by Warren Buffett about Wall Street reform’s impact on trillions of dollars in existing derivatives as legislation nears the finish line.
On Wednesday, the day the House passed the overhaul legislation, key Senate Democrats wrote a four-page letter clarifying the legislation’s impact on the $600 trillion derivatives market that many blame for exacerbating the financial crisis.
Senate Banking Committee Chairman Chris Dodd (D-Conn.) and Agriculture Committee Chairwoman Blanche Lincoln (D-Ark.) wrote that potential new capital and margin regulations meant to offset risk in some trades should not apply retroactively to existing derivatives.
Monday, June 7, 2010
Brazil to your bank: How derivatives circle globe
http://finance.yahoo.com/news/Brazil-to-your-bank-How-apf-2418761829.html?x=0&sec=topStories&pos=6&asset=&ccode=
Derivatives enable your life to be effected by being nothing more than a side bet.
Assmann is perpetually worried he will run short of cash if prices for his crops fall. So he tries to pay for some of his supplies at the start of the growing season with a fixed amount of soybeans that will be collected at the end.
His suppliers don't want to take on the risk of falling prices, either. But last month Philadelphia chemical maker FMC Corp. agreed to send Assmann all the insecticides and herbicides he needs in exchange for a third of his expected harvest.
Making the barter possible: A separate derivative that FMC, without Assmann's knowledge, got a bank to design. That side bet is designed to make sure FMC won't lose a penny if soybean prices fall.
"They seem very complicated," Assmann, 39, said when told about the derivative. "A poultry company here lost a lot of money in derivatives. I don't fully understand them."
Neither do most people, even though trade in many things we buy every day would slow or even stop without them.
Derivatives are private bets between two parties on how the value of assets like crops or measures like interest rates will change in the future. Most aren't traded on exchanges, and they're hard to value.
There's a derivative for nearly everything. You can bet that the Standard & Poor's 500 index will be higher in a year or the dollar will fall in value. You can bet that people of a certain age will die off faster than expected. A few creative financiers once devised a derivative that allowed you to bet on the value of future royalties from old David Bowie songs. Others came up with one to bet on how many basketball games the Utah Jazz would win in a year. And, yes, you can bet on soybeans in all their varieties -- crushed or ground, solid or oil, normal-sized or miniature.
For all the positives that investors see in derivatives, the investments can also be dangerous. Dubbed "financial weapons of mass destruction" by billionaire Warren Buffett, derivatives have been behind nearly every recent financial blowup from the bankruptcy of Orange County, Calif., in 1994 to the collapse of the housing market.
Derivatives enable your life to be effected by being nothing more than a side bet.
Assmann is perpetually worried he will run short of cash if prices for his crops fall. So he tries to pay for some of his supplies at the start of the growing season with a fixed amount of soybeans that will be collected at the end.
His suppliers don't want to take on the risk of falling prices, either. But last month Philadelphia chemical maker FMC Corp. agreed to send Assmann all the insecticides and herbicides he needs in exchange for a third of his expected harvest.
Making the barter possible: A separate derivative that FMC, without Assmann's knowledge, got a bank to design. That side bet is designed to make sure FMC won't lose a penny if soybean prices fall.
"They seem very complicated," Assmann, 39, said when told about the derivative. "A poultry company here lost a lot of money in derivatives. I don't fully understand them."
Neither do most people, even though trade in many things we buy every day would slow or even stop without them.
Derivatives are private bets between two parties on how the value of assets like crops or measures like interest rates will change in the future. Most aren't traded on exchanges, and they're hard to value.
There's a derivative for nearly everything. You can bet that the Standard & Poor's 500 index will be higher in a year or the dollar will fall in value. You can bet that people of a certain age will die off faster than expected. A few creative financiers once devised a derivative that allowed you to bet on the value of future royalties from old David Bowie songs. Others came up with one to bet on how many basketball games the Utah Jazz would win in a year. And, yes, you can bet on soybeans in all their varieties -- crushed or ground, solid or oil, normal-sized or miniature.
For all the positives that investors see in derivatives, the investments can also be dangerous. Dubbed "financial weapons of mass destruction" by billionaire Warren Buffett, derivatives have been behind nearly every recent financial blowup from the bankruptcy of Orange County, Calif., in 1994 to the collapse of the housing market.
Wednesday, May 5, 2010
Congressional hypocrites were betting against stocks as country collapsed
http://www.businessinsider.com/henry-blodget-congressional-hypocrites-were-betting-against-stocks-as-country-collapsed-2010-5
What's that smell?
Oh just a little conflict of interest.
Goldman style, is a bigger disease than it's being given credit for.
Country, clients.....same difference.
They both got used, and paid for the privilege of it.
Remember all that scorn in Congress about evil shortsellers betting against America and bringing the country down?
Well, it turns out Congress-people did it, too. And they used derivatives to do it, which they now say they abhor
And, yes, most of the folks here were just betting against stocks, not actually selling stocks short. But it's the same idea. To use their own tortured, populist logic, they were betting against the country and their 401k-holding constituents!)
Read more: http://www.businessinsider.com/henry-blodget-congressional-hypocrites-were-betting-against-stocks-as-country-collapsed-2010-5#ixzz0n4Fnk8S0
What's that smell?
Oh just a little conflict of interest.
Goldman style, is a bigger disease than it's being given credit for.
Country, clients.....same difference.
They both got used, and paid for the privilege of it.
Remember all that scorn in Congress about evil shortsellers betting against America and bringing the country down?
Well, it turns out Congress-people did it, too. And they used derivatives to do it, which they now say they abhor
And, yes, most of the folks here were just betting against stocks, not actually selling stocks short. But it's the same idea. To use their own tortured, populist logic, they were betting against the country and their 401k-holding constituents!)
Read more: http://www.businessinsider.com/henry-blodget-congressional-hypocrites-were-betting-against-stocks-as-country-collapsed-2010-5#ixzz0n4Fnk8S0
Monday, April 26, 2010
Deal Near on Derivatives
http://online.wsj.com/article/SB10001424052748703441404575206252252365076.html?mod=WSJ_hpp_LEFTTopStories
Oh check it out, Warren knew that Derivatives were weapons of financial mass destruction, and he chose to invest in them anyway and now he wants a break cut for his own past stupidity and greed.
If he does get this break, then the American taxpayer is still on the hook for every derivative transaction made in the past that still has yet to implode, no matter who it was dealt by.
So how is there any change to be seen in that? The loaded gun still seems to be pointed right at the taxpayers head.
What it all boils down to is that "big boys" shouldn't play games they can't afford to pay for, and should be held responsible for the consequences when they do.
Berkshire Presses Lawmakers to Roll Back Proposed Curbs, Avoiding Potential Hit
The provision, sought by Berkshire and pushed by Nebraska Sen. Ben Nelson in the Senate Agriculture Committee, would largely exempt existing derivatives contracts from the proposed rules. Previously, the legislation could have allowed regulators to require that companies such as Nebraska-based Berkshire put aside large sums to cover potential losses. The change thus would aid Berkshire, which has a $63 billion derivatives portfolio, according to Barclays Capital.
Mr. Buffett's push is especially notable because he has warned of the potential dangers of derivatives, famously branding them "financial weapons of mass destruction."
Oh check it out, Warren knew that Derivatives were weapons of financial mass destruction, and he chose to invest in them anyway and now he wants a break cut for his own past stupidity and greed.
If he does get this break, then the American taxpayer is still on the hook for every derivative transaction made in the past that still has yet to implode, no matter who it was dealt by.
So how is there any change to be seen in that? The loaded gun still seems to be pointed right at the taxpayers head.
What it all boils down to is that "big boys" shouldn't play games they can't afford to pay for, and should be held responsible for the consequences when they do.
Berkshire Presses Lawmakers to Roll Back Proposed Curbs, Avoiding Potential Hit
The provision, sought by Berkshire and pushed by Nebraska Sen. Ben Nelson in the Senate Agriculture Committee, would largely exempt existing derivatives contracts from the proposed rules. Previously, the legislation could have allowed regulators to require that companies such as Nebraska-based Berkshire put aside large sums to cover potential losses. The change thus would aid Berkshire, which has a $63 billion derivatives portfolio, according to Barclays Capital.
Mr. Buffett's push is especially notable because he has warned of the potential dangers of derivatives, famously branding them "financial weapons of mass destruction."
Sunday, April 25, 2010
Derivatives To Be Spun Off?
http://market-ticker.denninger.net/archives/2232-Derivatives-To-Be-Spun-Off.html
Am I dreaming?
In an agreement struck Sunday, Banking Committee Chairman Chris Dodd agreed to replace his proposed restrictions on derivatives with those of the Senate Agriculture Committee, chaired by Arkansas Democrat Blanche Lincoln.
If you remember, I wrote about this a few days ago:
Along with forcing commercial banks to spin off their swaps dealers to a different corporate entity, Lincoln’s derivatives legislation would bar dealers, exchanges, clearinghouses and other swaps-market participants from being able to take advantage of emergency lending from the Fed, according to the aide.
Ding ding ding ding.
Give this lady a cigar!
Look folks, we can't fix what's broken if we don't do this.
Let's boil it all down to the simple when it comes to banks and their operations:
It is essentially impossible for us to have meaningful reform if institutions with access to government backstops and privileges, including but not limited to the ability to fractionally reserve, access to The Fed window and FDIC insurance, are able to trade in the derivatives business.
Am I dreaming?
In an agreement struck Sunday, Banking Committee Chairman Chris Dodd agreed to replace his proposed restrictions on derivatives with those of the Senate Agriculture Committee, chaired by Arkansas Democrat Blanche Lincoln.
If you remember, I wrote about this a few days ago:
Along with forcing commercial banks to spin off their swaps dealers to a different corporate entity, Lincoln’s derivatives legislation would bar dealers, exchanges, clearinghouses and other swaps-market participants from being able to take advantage of emergency lending from the Fed, according to the aide.
Ding ding ding ding.
Give this lady a cigar!
Look folks, we can't fix what's broken if we don't do this.
Let's boil it all down to the simple when it comes to banks and their operations:
It is essentially impossible for us to have meaningful reform if institutions with access to government backstops and privileges, including but not limited to the ability to fractionally reserve, access to The Fed window and FDIC insurance, are able to trade in the derivatives business.
Thursday, February 4, 2010
Italy Seizes Bank of America, Dexia Assets Amid Probe
http://www.bloomberg.com/apps/news?pid=20601087&sid=aWJC2mYeMKqg&pos=5
Oh look Italy doesn't want to give the Wall Street gone wild boys a bonus.
It looks like maybe they want their money back from the rigged hand the banks were dealing out.
The name of the game is called fraud, and "The World" was their casino.
It's time to give them the bonuses they really deserve, an all expense paid vacation to a penal institution.
Move over Bernie it looks like your going to have some company!
Italy’s financial police are seizing 73.3 million euros ($102 million) of assets from Bank of America Corp. and a unit of Dexia SA as part of a probe into an alleged derivatives fraud in the region of Apulia.
Police are investigating losses on derivatives linked to the sale of 870 million euros of bonds sold by the regional government in 2003 and 2004, according to an e-mail from the prosecutor’s office in Bari today. The banks misled the municipality, located in the heel of Italy, on the economic advantages of the transaction and concealed their fees, the prosecutor said.
The region, also known as Puglia, joins more than 519 Italian municipalities that face 990 million euros in derivatives losses, according to data compiled by the Bank of Italy. In Milan, prosecutors seized assets from four banks including JPMorgan Chase & Co. and UBS AG in April and requested they stand trial for alleged fraud. Hearings started this month.
“Italy, like other countries, is full of these examples,” said Dario Loiacono, a banking lawyer in Milan who isn’t involved in the case
Oh look Italy doesn't want to give the Wall Street gone wild boys a bonus.
It looks like maybe they want their money back from the rigged hand the banks were dealing out.
The name of the game is called fraud, and "The World" was their casino.
It's time to give them the bonuses they really deserve, an all expense paid vacation to a penal institution.
Move over Bernie it looks like your going to have some company!
Italy’s financial police are seizing 73.3 million euros ($102 million) of assets from Bank of America Corp. and a unit of Dexia SA as part of a probe into an alleged derivatives fraud in the region of Apulia.
Police are investigating losses on derivatives linked to the sale of 870 million euros of bonds sold by the regional government in 2003 and 2004, according to an e-mail from the prosecutor’s office in Bari today. The banks misled the municipality, located in the heel of Italy, on the economic advantages of the transaction and concealed their fees, the prosecutor said.
The region, also known as Puglia, joins more than 519 Italian municipalities that face 990 million euros in derivatives losses, according to data compiled by the Bank of Italy. In Milan, prosecutors seized assets from four banks including JPMorgan Chase & Co. and UBS AG in April and requested they stand trial for alleged fraud. Hearings started this month.
“Italy, like other countries, is full of these examples,” said Dario Loiacono, a banking lawyer in Milan who isn’t involved in the case
Thursday, September 10, 2009
Goldman chief admits banks lost control
http://www.ft.com/cms/s/0/ffb670be-9d33-11de-9f4a-00144feabdc0.html?nclick_check=1
If there was no value either socially or economically, then WHY were they allowed to be preformed?
The answer: Because THEY could! and did without a worry in the world as to the damage that they knew was coming down the pike.
Lloyd Blankfein, chief executive of Goldman Sachs, on Wednesday admitted that banks lost control of the exotic products they sold in the run-up to the financial crisis, and said that some of the instruments lacked social or economic value.
In a speech to the Handelsblatt banking conference in Frankfurt, he also repeated an attack, first made in the spring, on Wall Street compensation practices, calling the furore over bankers’ pay “understandable and appropriate
If there was no value either socially or economically, then WHY were they allowed to be preformed?
The answer: Because THEY could! and did without a worry in the world as to the damage that they knew was coming down the pike.
Lloyd Blankfein, chief executive of Goldman Sachs, on Wednesday admitted that banks lost control of the exotic products they sold in the run-up to the financial crisis, and said that some of the instruments lacked social or economic value.
In a speech to the Handelsblatt banking conference in Frankfurt, he also repeated an attack, first made in the spring, on Wall Street compensation practices, calling the furore over bankers’ pay “understandable and appropriate
Friday, September 4, 2009
The $531 Trillion Dollar Derivatives Time Bomb
http://www.wiseupjournal.com/?p=1096
What are derivatives? Some investors describe them as “dormant economic weapons of mass destruction”. They essentially are large leveraged bets on top of stocks, bonds and commodities. Money can be made within months or seconds by betting if a stock will go up, down or even remain the same. With no credit rating you can place a bet worth double your account balance. Big time investors get greater leverage with these instantaneous loans.
The New York Times, Oct 8th 2008: “The derivatives market is $531 trillion, up from $106 trillion in 2002″. This market is setup with odds similar to a racetrack. Trillions are won and lost (transferred) every second. But unlike a racetrack the big players have ultimate control. Their trillions
What are derivatives? Some investors describe them as “dormant economic weapons of mass destruction”. They essentially are large leveraged bets on top of stocks, bonds and commodities. Money can be made within months or seconds by betting if a stock will go up, down or even remain the same. With no credit rating you can place a bet worth double your account balance. Big time investors get greater leverage with these instantaneous loans.
The New York Times, Oct 8th 2008: “The derivatives market is $531 trillion, up from $106 trillion in 2002″. This market is setup with odds similar to a racetrack. Trillions are won and lost (transferred) every second. But unlike a racetrack the big players have ultimate control. Their trillions
Friday, June 19, 2009
Power Writes History
http://www.minyanville.com/articles/C-bac-ms-economy-banks-wfc/index/a/23189/from/home
The government's white paper describing the causes and effects of the financial crises provides the rationale for President Obama's proposals for reform. Conveniently, nowhere does the paper mention the actual primary causes:
1. The Federal Reserve kept real interest rates negative for nearly five years. Negative interest rates are an abomination, a radiation to proper pricing of risk:they encourage if
not force excessive risk-taking.
2. The Federal Reserve kept margin requirements at banks too low for too long.
3. The shoddy monitoring of off-balance sheet leverage and derivatives, both of which accelerated leverage to unparalleled levels.
4. The Congressional creation and support of the GSEs, which guaranteed and bought debt that would otherwise never been made because of its quality.
Of course the banking industry played along. Unfortunately, the private market will always take advantage of shoddy government regulation. But the private market never would have had the fuel or the risky inclinations if not for the above.
But the above wasn't mentioned, because the paper was written by those culpable.
Now we are about to give the very institution, a private bank with its own shareholders and where only half its board members are appointed by the government, undefined powers. Ron Paul has nearly half of Congress willing to support a bill to audit the Fed. It can't come soon enough. We know a lot more about the operations of the CIA than we do about the operations of the Fed, whose operations that always devalue our currency.
We will rue the day that we gave this power to the Fed. The power is undefined; they have carte blanche. We should by now all realize the destruction for which the Fed is already responsible.
Risk is high.
The government's white paper describing the causes and effects of the financial crises provides the rationale for President Obama's proposals for reform. Conveniently, nowhere does the paper mention the actual primary causes:
1. The Federal Reserve kept real interest rates negative for nearly five years. Negative interest rates are an abomination, a radiation to proper pricing of risk:they encourage if
not force excessive risk-taking.
2. The Federal Reserve kept margin requirements at banks too low for too long.
3. The shoddy monitoring of off-balance sheet leverage and derivatives, both of which accelerated leverage to unparalleled levels.
4. The Congressional creation and support of the GSEs, which guaranteed and bought debt that would otherwise never been made because of its quality.
Of course the banking industry played along. Unfortunately, the private market will always take advantage of shoddy government regulation. But the private market never would have had the fuel or the risky inclinations if not for the above.
But the above wasn't mentioned, because the paper was written by those culpable.
Now we are about to give the very institution, a private bank with its own shareholders and where only half its board members are appointed by the government, undefined powers. Ron Paul has nearly half of Congress willing to support a bill to audit the Fed. It can't come soon enough. We know a lot more about the operations of the CIA than we do about the operations of the Fed, whose operations that always devalue our currency.
We will rue the day that we gave this power to the Fed. The power is undefined; they have carte blanche. We should by now all realize the destruction for which the Fed is already responsible.
Risk is high.
Wednesday, June 17, 2009
Five Things: What Really Caused the Debt Crisis
http://www.minyanville.com/articles/.../index/a/23157
Very well worth the read, Silver buffs will love the second page
1) What Really Caused the Debt Crisis
Yesterday I ran across a recent interview with the Financial Times' Gillian Tett which appeared in Newsweek. Tett has a new book out that looks interesting, "Fool's Gold: How the Bold Dream of a Small Tribe at J.P. Morgan Was Corrupted by Wall Street Greed and Unleashed a Catastrophe."
In the interview, Tett was asked, Once things started to go bad, there were a lot of mistakes made by managers but also by policymakers on both sides of the Atlantic. What, in your mind, were some of the crucial ones?
"One of the biggest policy mistakes was made by the American officials who repeatedly said that the subprime problem was contained and that there was no reason to worry about it at all. That represented a considerable misunderstanding of how the financial system had changed. They failed to calculate the enormous quantity of derivatives written … nobody knew how big they were."
Her response leads to a point I've been trying to make in Five Things with respect to Socionomics and herding behavior. Consider this point: "one of the biggest policy mistakes was made by the American officials who repeatedly said that the subprime problem was contained and that there was no reason to worry about it at all." Well, that's not really a policy mistake so much as an observational mistake
Very well worth the read, Silver buffs will love the second page
1) What Really Caused the Debt Crisis
Yesterday I ran across a recent interview with the Financial Times' Gillian Tett which appeared in Newsweek. Tett has a new book out that looks interesting, "Fool's Gold: How the Bold Dream of a Small Tribe at J.P. Morgan Was Corrupted by Wall Street Greed and Unleashed a Catastrophe."
In the interview, Tett was asked, Once things started to go bad, there were a lot of mistakes made by managers but also by policymakers on both sides of the Atlantic. What, in your mind, were some of the crucial ones?
"One of the biggest policy mistakes was made by the American officials who repeatedly said that the subprime problem was contained and that there was no reason to worry about it at all. That represented a considerable misunderstanding of how the financial system had changed. They failed to calculate the enormous quantity of derivatives written … nobody knew how big they were."
Her response leads to a point I've been trying to make in Five Things with respect to Socionomics and herding behavior. Consider this point: "one of the biggest policy mistakes was made by the American officials who repeatedly said that the subprime problem was contained and that there was no reason to worry about it at all." Well, that's not really a policy mistake so much as an observational mistake
Subscribe to:
Posts (Atom)