Derivatives are a zero-sum game, except in the case of counter-party default. When four or five institutions hold the majority of derivatives world wide, we have massive systemic risk. Couple that with opaque derivative objects that make risk management near impossible, and you have a house of cards ready to collapse at the slightest whisper of wind. Truthfully, the bailout is not a choice -- it is currently the only option. Each institution that fails makes the others weaker. Bailouts and negotiated mergers must occur. It may hurt the little guy, but letting them all fail will hurt a lot more. All in my uneducated opinion, of course.
Well now.... This is exactly the type of response that I am expecting.... At the moment...... Does anyone anywhere know exactly what would happen if all the "too big to fail" failed ? C,MER,LEH,GM,F,WFC,ETC............ What exactly would happen ? DOES ANYBODY KNOW ? DO THE POLITICIANS KNOW ? WHO IS IMPLEMENTING A SOLUTION AND IMPOSING THE COST TO THE PUBLIC.....? A SOLUTION THAT IS NOT A SOLUTION ? .................................................................................................. Here it is "IN ENGLISH"..... One does not gain by increasingly taxing a diminishing quantity...... It is possible to gain by taxing an increasing quantity..... All proposed solutions are about taxing a diminishing quantity whose impositions are unequally shared by individuals..... It is ever so clear....that this is a failed concept from day one.... There is no further questioning needed.... It is what it is......
In the Rose interview with Dodd he raised the prospect of governments giving up some sovereignty for international regulation. SO...the idea is that some unelected guy is going to sit on top of everything and things happen the way they happen because he says so... Didn't we have that with Greenspan? Why does Dodd propose this - because it worked so well in the U.S.? Seems the local banks have the least amount of problems - which means it makes more sense for the banks to be smaller and more local, not huge and run via monarchy.
Wavestrider Seems the local banks have the least amount of problems - which means it makes more sense for the banks to be smaller and more local, not huge and run via monarchy. ........................................................................ I have mentioned this many times in previous posts.... Local, discount asset based lending..... Proof Positive...... Just examine the banks that are doing well today.... This is exactly what they do..... They have avoided all of the nonsense.....
Yes - it is apparent what works well and what has not. Yet someone like Dodd (and I think Pearlstein (sp?) of the Washington Post has been throwing out this "give up sovereignty" thing as if making the Greenspan approach bigger is somehow the answer. The logic of that escapes me. You want to reproduce success, not failure. And you really don't want to expand a failed approach and give it even greater authority. So can someone explain why this keeps coming up?
You might want to look up the terms I used: systemic risk and counter-party failure. These aren't just buzz words, they actually mean something. Once you understand how they apply to the derivatives market, and once you realize how derivatives are distributed around the world and how risk analysis is performed, you might understand that 'finding out what happens when they fail' isn't an option. I agree with your assessment that banks should be locally based, and that the majority of our problems derive from large, national institutions -- but we must also realize that 'large national institutions' can help improve efficiency and profit in a free market -- which is why they exist. Otherwise, we would have to impose some sort of regulation to persuade local banks to exist...which isn't very free market at all.
Because the FED and the fiancial system -- i.e. JPM, C, GS -- are the SAME THING. They are NOT bailing out the financial system. They are bailing out THEMSELVES! If the financial system collapses the FED collapses. Why is the government not so willing to bail out the Auto's? Because the Auto's is NOT the FED. The FED gets priority and if there is anything left the Auto's will get their hands on some funds.
I don't agree that dollar dilution is a tax. The dollar is just another commodity really. The thing is that it can be created or destroyed at will. What you really have when the presses run is commodity manipulation. The thing is that the guys running the presses can be on the right side of the trade and they can direct the bailout money to banks that they own. I would be entirely hopeless about these things except I can see that these "world class" leaders are on a collision course with God Himself. He has a book out btw, it's a best seller, people ought to read it
Corey Is a good response You might want to look up the terms I used: systemic risk and counter-party failure. These aren't just buzz words, they actually mean something. Once you understand how they apply to the derivatives market, and once you realize how derivatives are distributed around the world and how risk analysis is performed, you might understand that 'finding out what happens when they fail' isn't an option. I agree with your assessment that banks should be locally based, and that the majority of our problems derive from large, national institutions -- but we must also realize that 'large national institutions' can help improve efficiency and profit in a free market -- which is why they exist. Otherwise, we would have to impose some sort of regulation to persuade local banks to exist...which isn't very free market at all. ............................................................................................... What needs to be made clear is exactly what the position of failure exactly means..... Even if it goes like this..... Response..... All of the major financial firms have lost the majority of all the publics' wealth by squandering it in unethical and grossly mismanaged ways such that ....if an additional tax imposition of 50% of all remaining individual wealth is going to have to be taken to save the day.....via the further dilutive monetization of the dollar.... Do you know what the term "Suitability" means in a court of law ...when a large firm willfully and knowingly squanders the retirement assets of individuals ...that cannot go back in time and replace them ? Of course I know what systemic risk/loss whatever you want to call it is....who does not know this..... The fact is ...the money is gone..... And one is not going to solve this matter by increasing taxes from diminishing assets..... The fact is......one has to start over.... And build it right the next time..... Part of which.... are required structural changes such as a 10% only consumption taxes....this is how losses can be more quickly recouped ...along with a properly designed world wide securities exchange....WS is not wanted or needed.....They got it wrong and should be eliminated....who that has an ounce of sanity would trust these fools one more time ? NOBODY...NOT YOU...CERTAINLY NOT LAWYERS....AND CERTAINLY THE US PUBLIC....SIMPLY DOES NOT GET IT..... JUST SIT BACK....WATCH THE MOVIE....HAVE A COKE AND SOME POPCORN......