Fight the Derivatives Cancer with a Wall Street Sales Tax, Plus Bans on Hedge Funds, Credit Default Swaps, and Synthetic CDOs

http://tarpley.net/2010/04/25/fight-the-derivatives-cancer-with-a-wall-street-sales-tax-plus-bans-on-hedge-funds-credit-default-swaps-and-synthetic-cdos/

As a country that wishes to maintain our sovereignty we can no longer afford to overlook our own downfall, because it's plainly staring us in the face.
The games of speculation that the rich play behind the curtain place no value on human life. It's all only about the numbers in dollar signs and they create those numbers anyway they can and use our lives to do with as well as to bail them out when they fail. They only live because "WE" let them.
It's time to end this game before it ends all of us. As "the world's people", "WE" owe it to our selves.


The urgent problem raised by all this is the $1.5 quadrillion derivatives bubble. The financial crisis which struck the United States and the world in September and October 2008 was in fact a world a derivatives panic. This panic marked the first phase of a world economic depression caused by derivatives speculation. The second phase of this depression, which is now beginning, can also be attributed in large part to derivatives, since derivatives are the main tool being used in the speculative attacks on Greece, Spain, Portugal, Italy, Ireland, and other nations, building up towards a chaotic collapse of the euro.

Derivatives are the Cause of the World Depression of Our Time
Far from being some arcane or marginal activity, financial derivatives have come to represent the principal business of the financier oligarchy in Wall Street, the City of London, Frankfurt, and other money centers. A concerted effort has been made by politicians and the news media to hide and camouflage the central role played by derivative speculation in the economic disasters of recent years. Journalists and public relations types have done everything possible to avoid even mentioning derivatives, coining phrases like “toxic assets,” “exotic instruments,” and – most notably – “troubled assets,” as in Troubled Assets Relief Program or TARP, aka the monstrous $800 billion bailout of Wall Street speculators which was enacted in October 2008 with the support of Bush, Henry Paulson, John McCain, Sarah Palin, and the Obama Democrats.

Secret AIG Document Shows Goldman Sachs Minted Most Toxic CDOs

http://www.bloomberg.com/apps/news?pid=20601087&sid=ax3yON_uNe7I


The banks should have to explain how they managed to buy protection from AIG primarily on securities that fell so sharply in value, says Daniel Calacci, a former swaps trader and marketer who’s now a structured-finance consultant in Warren, New Jersey. In some cases, banks also owned mortgage lenders, and they should be challenged to explain whether they gained any insider knowledge about the quality of the loans bundled into the CDOs, he says.

‘Too Uncanny’

“It’s almost too uncanny,” Calacci says. “If these banks had insight into the underlying loans because they had relationships with banks, originators or servicers, that’s at the least unethical.”

The identification of securities in the document, known as Schedule A, and data compiled by Bloomberg show that Goldman Sachs underwrote $17.2 billion of the $62.1 billion in CDOs that AIG insured -- more than any other investment bank. Merrill Lynch & Co., now part of Bank of America Corp., created $13.2 billion of the CDOs, and Deutsche Bank AG underwrote $9.5 billion.

These tallies suggest a possible reason why the New York Fed kept so much under wraps, Professor James Cox of Duke University School of Law says: “They may have been trying to shield Goldman -- for Goldman’s sake or out of macro concerns that another investment bank would be at risk.”

Poor Performers

Goldman Sachs spokesman Michael DuVally declined to comment.

Goldman E-Mail Message Lays Bare Trading Conflicts

http://finance.yahoo.com/banking-budgeting/article/108565/goldman-email-message-lays-bare-trading-conflicts?sec=topStories&pos=8&asset=&ccode=

Here comes another buy off, pay the penatly and resume the game.
If you or I did this it's jail time but since a corporation did it, it's only takes a small fine to make it go away.

For years, Wall Street whispered that Goldman Sachs profited handsomely by trading ahead of -- or even against -- its own clients.

On Tuesday, a Goldman executive made an unusual admission that, in some cases, the rumors were true.

Under federal rules, research analysts cannot mislead clients by promoting stocks that the analysts privately do not believe in or that the firm has a vested interest in. Research analysts are also prevented from providing information to their firms' own traders before disseminating their reports more broadly.

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