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How Greece Could Take Down Wall Street
In an article titled “Still No End to ‘Too Big to Fail,’” William Greider wrote in The Nation on February 15th:
Financial market cynics have assumed all along that Dodd-Frank did not end "too big to fail" but instead created a charmed circle of protected banks labeled "systemically important" that will not be allowed to fail, no matter how badly they behave.
That may be, but there is one bit of bad behavior that Uncle Sam himself does not have the funds to underwrite: the $32 trillion market in credit default swaps (CDS). Thirty-two trillion dollars is more than twice the U.S. GDP and more than twice the national debt.
CDS are a form of derivative taken out by investors as insurance against default. According to the Comptroller of the Currency, nearly 95% of the banking industry’s total exposure to derivatives contracts is held by the nation’s five largest banks: JPMorgan Chase, Citigroup, Bank of America, HSBC, and Goldman Sachs. The CDS market is unregulated, and there is no requirement that the “insurer” actually have the funds to pay up. CDS are more like bets, and a massive loss at the casino could bring the house down.
It could, at least, unless the casino is rigged. Whether a “credit event” is a “default” triggering a payout is determined by the International Swaps and Derivatives Association (ISDA), and it seems that the ISDA is owned by the world’s largest banks and hedge funds. That means the house determines whether the house has to pay.
The Houses of Morgan, Goldman and the other Big Five are justifiably worried right now, because an “event of default” declared on European sovereign debt could jeopardize their $32 trillion derivatives scheme. According to Rudy Avizius in an article on The Market Oracle (UK) on February 15th, that explains what happened at MF Global, and why the 50% Greek bond write-down was not declared an event of default.
If you paid only 50% of your mortgage every month, these same banks would quickly declare you in default. But the rules are quite different when the banks are the insurers underwriting the deal.
MF Global: Canary in the Coal Mine?
MF Global was a major global financial derivatives broker until it met its unseemly demise on October 30, 2011, when it filed the eighth-largest U.S. bankruptcy after reporting a “material shortfall” of hundreds of millions of dollars in segregated customer funds. The brokerage used a large number of complex and controversial repurchase agreements, or "repos," for funding and for leveraging profit. Among its losing bets was something described as a wrong-way $6.3 billion trade the brokerage made on its own behalf on bonds of some of Europe’s most indebted nations.
Avizius writes:
[A]n agreement was reached in Europe that investors would have to take a write-down of 50% on Greek Bond debt. Now MF Global was leveraged anywhere from 40 to 1, to 80 to 1 depending on whose figures you believe. Let’s assume that MF Global was leveraged 40 to 1, this means that they could not even absorb a small 3% loss, so when the “haircut” of 50% was agreed to, MF Global was finished. It tried to stem its losses by criminally dipping into segregated client accounts, and we all know how that ended with clients losing their money. . . .
However, MF Global thought that they had risk-free speculation because they had bought these CDS from these big banks to protect themselves in case their bets on European Debt went bad. MF Global should have been protected by its CDS, but since the ISDA would not declare the Greek “credit event” to be a default, MF Global could not cover its losses, causing its collapse.
The house won because it was able to define what “ winning” was. But what happens when Greece or another country simply walks away and refuses to pay? That is hardly a “haircut.” It is a decapitation. The asset is in rigor mortis. By no dictionary definition could it not qualify as a “default.”
That sort of definitive Greek default is thought by some analysts to be quite likely, and to be coming soon. Dr. Irwin Stelzer, a senior fellow and director of Hudson Institute’s economic policy studies group, was quoted in Saturday’s Yorkshire Post (UK) as saying:
It’s only a matter of time before they go bankrupt. They are bankrupt now, it’s only a question of how you recognise it and what you call it.
Certainly they will default . . . maybe as early as March. If I were them I’d get out [of the euro].
The Midas Touch Gone Bad
In an article in The Observer (UK) on February 11th titled “The Mathematical Equation That Caused the Banks to Crash,” Ian Stewart wrote of the Black-Scholes equation that opened up the world of derivatives:
The financial sector called it the Midas Formula and saw it as a recipe for making everything turn to gold. But the markets forgot how the story of King Midas ended.
As Aristotle told this ancient Greek tale, Midas died of hunger as a result of his vain prayer for the golden touch. Today, the Greek people are going hungry to protect a rigged $32 trillion Wall Street casino. Avizius writes:
The money made by selling these derivatives is directly responsible for the huge profits and bonuses we now see on Wall Street. The money masters have reaped obscene profits from this scheme, but now they live in fear that it will all unravel and the gravy train will end. What these banks have done is to leverage the system to such an extreme, that the entire house of cards is threatened by a small country of only 11 million people. Greece could bring the entire world economy down. If a default was declared, the resulting payouts would start a chain reaction that would cause widespread worldwide bank failures, making the Lehman collapse look small by comparison.
Some observers question whether a Greek default would be that bad. According to a comment on Forbes on October 10, 2011:
[T]he gross notional value of Greek CDS contracts as of last week was €54.34 billion, according to the latest report from data repository Depository Trust & Clearing Corporation (DTCC). DTCC is able to undertake internal netting analysis due to having data on essentially all of the CDS market. And it reported that the net losses would be an order of magnitude lower, with the maximum amount of funds that would move from one bank to another in connection with the settlement of CDS claims in a default being just €2.68 billion, total. If DTCC’s analysis is correct, the CDS market for Greek debt would not much magnify the consequences of a Greek default—unless it stimulated contagion that affected other European countries.
It is the “contagion,” however, that seems to be the concern. Players who have hedged their bets by betting both ways cannot collect on their winning bets; and that means they cannot afford to pay their losing bets, causing other players to also default on their bets. The dominos go down in a cascade of cross-defaults that infects the whole banking industry and jeopardizes the global pyramid scheme. The potential for this sort of nuclear reaction was what prompted billionaire investor Warren Buffett to call derivatives “weapons of financial mass destruction.” It is also why the banking system cannot let a major derivatives player—such as Bear Stearns or Lehman Brothers—go down. What is in jeopardy is the derivatives scheme itself. According to an article in The Wall Street Journal on January 20th:
Hanging in the balance is the reputation of CDS as an instrument for hedgers and speculators—a $32.4 trillion market as of June last year; the value that may be assigned to sovereign debt, and $2.9 trillion of sovereign CDS, if the protection isn't seen as reliable in eliciting payouts; as well as the impact a messy Greek default could have on the global banking system.
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96 Comments so far
Show AllWe will all be Greeks soon!
look around bro - we are now
there is only one way for greece or anyone else to get out from under the terrorist banksters
you do like iceland did and tell them to fuck off - plain and simple
its the only language they understand
That's rather blunt and profane, but nevertheless it is correct.
Greece should and likely will default and go back to the Drachma as their currency.
The real concern in Europe is not Greece at all as can be seen by the austerity measures being foisted upon it.
The concern is that without a bailout, the European banks that lent too much money to a borrower they should have known could pay back will go bankrupt.
Here, Hear!
If all countries defaulted, including USA, what would that do to regular people?
Can someone explain this in clear, concise language?
I doubt that anyone is really sure how it would affect regular people. The problem is that many regular people have IRAs and pensions, which are invested by the fund managers in a variety of kinds of securities, including derivatives, because they promise high interest payments, and the fund managers want to bring in as much money as possible.
So, if the derivatives market crashes, the values of those pensions will also crash, and anyone who depends on their investments for income is out of luck - just like the farmers who invested in futures contracts, which seemed to vanish when MF Global went bankrupt.
So the short, and undoubtedly oversimplifed answer is that your job might not be threatened, but any savings you have may well vanish.
To many of us that senario has already happened. We've had to deal with it. It's time the 01% had to deal with it.
I think you hit the nail on the head sheepherder, "The problem is the many regular people have IRAs and pensions....ect."
Did congress around late 2008, even try to make 'a way out, thru law, that could of offered every US pensioner & IRA holder some idea of dignity & choice to withdraw their funds without a penalty from the scheming'....of course NOT. But truely the problem is that the GUTLESS American IRA holders, just watched their accounts get slaughtered & continued to keep their savings in the system, even as the Lehman Bros., Myrill Lynch & many others were going down in flames, even unto this very day! And those involved in big Pensions, really have no legal recourse for withdrawal, other than to just withdraw completely with zero asset recovery of their account. So the pensioned people are definately on the hook, until a law is made that gives a pensioner account the ability to opt out, till then mega money is left standing around for some financier to dally with.
whocares;)
And, I would also mention ISDA was founded in 1985
http://www2.isda.org/newsroom/Resources/Glossary/
...an institution 'legally set up' from new Federal Laws, at that time.... in the USA. Yep thats right...so this is not just your old timey terms of fraud you once heard of, this is a newer breed of fraud and insurance...hahahaha I'm laughing my ass off for years now, watching all this CDS, CDO, MHO bla bla bla.. fraud plays out a game with or without your money, better with YOUR money...but are the American people, & now international people in scope, are the people smart enough to not play that game? OF COURSE NOT!
whocares;)
A good thing to remember about IRAs is that there are many different companies, each with many different options available. I bought my first IRA a couple of decades ago. The companies representative showed me the tremendous profits that some of their products had been making. I happily put my money in this and within a year I had lost a fair bit of my principle. This was a good lesson. Since then I have purchased the safest, poorest paying IRAs available. So far, so good.
CDS's is what brought AIG down. Everyone together now, DEFAULT!
Thank you Common Dreams for this post by Ellen Brown. Very enlightening.
This points out once again why deregulation of the Glass Steagall Act in 1999 by Congress and the Clinton administration was dangerous on so many levels to the citizens of this country. Once we removed the separation between investment banks and commerical banking, all bets were on. I sincerely doubt that the "average" citizen knew what the impact could be to their future pensions. Often they were shown charts indicating how risky funds (bets) would still pay off over time.
Usually, people can move their pensions into low, medium, or high risk pension plans. IRA's can certainly be rolled over into "lower risk" accounts. At this point, if you haven't moved your pension plan into a "lower" risk fund, then be prepared for losses and start viewing it as a "bet". It's time for financial brokers to be honest with people about retirement accounts.
All bets were really off when Glass Steagall (repealed by the Gramm-Leach-Bliely) was replaced by the Commodities Futures Modernization Act that deregulated swaps as insisted on by then Sen. Phil Gramm (who now works for UBS). If there was a most wanted for the 2008 meltdown Gramm would be included.
The language that deregulated swaps included specific terms to avoid having it regulated even as gambling.
Oh, by the way, Wendy Gramm (Phil's wife) was chair of the Commodities Futures Trading Commission and previously on the Enron board.
Anyone invested in this system has already had their money spent. The only way to maintain the "value" of your investments is to never withdraw your cash, just as the only way for Greece to not default is for it to receive more "bailout" money to make the next interest payment. It's a Ponzi, pure and simple. All of it. The value of your investments is already gone. Sticking your head in the sand doesn't change this.
Human sacrifice, dogs and cats living together ... mass hysteria!
Then it all depends on how all these 'regular people' respond.
The ultimate, long-range solution of course is a completely different economic system based on cooperation - socialism, if you will. But the immediate answer would be to disband the Federal Reserve and nationalize our monetary system.
Read Ellen Brown's Web of Debt. You'll never look at the world the same again.
"The ultimate, long-range solution of course is a completely different economic system based on cooperation - socialism..."
Right you are, Z-Man. That will solve 98% of our social, economic and political problems. Will the majority ever appreciate that fact?
If all countries defaulted, including USA, what would that do to regular people?
Can someone explain this in clear, concise language?--Cleanearth
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
all done with smoke and mirrors! a ponzi scheme performed by the skillful snake oil salesman, the carnival barker who entices the gamer by allowing one to walk away with the biggest stuffed animal. the housing bubble? hot property! hot potato! "everybody a winner!"
REAL estate equals the land on which we walk.
an economy built on debt equals an economy going bankrupt!
what goes up MUST come down and all bubbles burst.
the value of a dollar deflates with each new printing.
~The ultimate, long-range solution of course is a completely different economic system based on cooperation - socialism, if you will.~Z man
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
uh-huh and might as well start where we live! don't wait for the franic banksters and their panic-ridden gov reps to change the system.
Inflation. Lots of it.
The complete opposite is far more likely. Inflation occurs because of one (or a combination) of two factors: too much demand with not enough supply and/or speculation on the currency. The USA has neither of these -- so your scenario will not happen any time soon. Bernanke pumped trillions of dollars into the banks during the past few years with his quantitative easing -- where was your inflation?
Have you been to the grocery store or the gas pump lately?
What does that have to do with the discussion, cbwim? Are you implying that the rise in prices at the grocery store or gas pump is caused by what Ellen Brown is writing about? If you are, you do not understand the forces of inflation.
The inflation you are referring to is almost completely related to speculation and it's first cousin, market manipulation.
"INFLATION: the increase in money supply above and beyond economic growth."
Quantitative Easing is another name for "money printing". And yes, cbwim, food and energy increases are not calculated in the government's phony inflation figures.
Indeed food and energy are NOT included in the core inflation figures the government puts out.
According to 1 source, if inflation (or rather cost of living increase) was calculated as it was in 1980 last year's figure would be 10.5%.
Personally, on low income I find that number credible although fore me 15% is more true because I spend so much on food (20-25% of my income).
The collapse of international banking is the one probable route we have to throwing off the yoke of the global oligarchy which is the root cause of wars, our loss of democracy (USA), imperialism and dependence on fossils. If you want a environmentally viable, democratic, just, peaceful world then the collapse of international banking is our best hope, no matter what our loss may be in the will o wisp "financial security". Its our life or our savings,a capitalist chooses material over life.
The article makes some good points. Greece is officially dead, all that's being negotiated right now is who has to bury the carcass and in whose back yard...
Unfortunately it is more like who will buy everything there at firesale prices.
This is a war being fought with economies; oligarchy vs the people.
If the scenario described by Ellen Brown is in fact the situation faced by the major players on Wall Street and their greatest fear, then the political elite in Greece make a major mistake for their country by agreeing to further austerity measures for the people in return for debt relief. What if the Greeks decided to demand debt relief WITHOUT all of the attached austerity measures imposed by the Germans and the Eurozone? Wouldn't it be better for the people of Greece to take the default and start over with solutions from within than spend decades with foreigners running your country, privatizing your assets, etc. They won't have high living standards for quite some time in the future anyway...why not rebuild on your own terms??
As far as I am concerned take it down. Time to end this fantasy. We humans are really good at cooperation when we need to be. The culture we are living in now goes way out of its way to separate us. Ideology, economically, etc. Let if fall we will be much better off no mater what the great god TV says.
Currently a big wedge issue being used against rebels, akin to the abortion issue, is the violence vs. non violence issue. Both can be accomadated, even by staunch Pacifists.
Remember that the 'Greek bailout' actually has none of the bailout funds going to the Greeks.....
The bailouts are for the banksters holding the Greek bonds....
All the banks are basically bankrupt right now - leveraged to the hilt where any little loss can take the entire firm down to where other firms are left picking the bones for the last little value.
For example it's been shown by max Keiser and on zero hedge that the missing 1.5 billion from mf global went to jp Morgan. Just as the much of the missing funds from AIG found their way into jp morgan accounts.
The banksters are engaging in Financial Terrorism - 'we'll do what we want and if we screw up you'll bail us out or we'll crash the world economy.
The real question is what will bring down the world economy 1st - the derivatives and the banksters or the $4-5 gas that's coming right around the corner.
And if gas hits $5 economy the economy will crash thereby helping to elect a rethug - where the sanatorium just said the problem with Obama is he places the earth over man!
The world economy is a house of cards and the wind is picking up - this isn't going to end well.
We should have reined in wall street and the banksters when the pain could have been somewhat contained.
Too bad we gave into the Financial Terrorists.
Canada is paying an average of $4.66/gal for gas right now. We have paid higher. And Canada is one of the US' primary petroleum suppliers.
High gas prices have not and will not be the trigger of a systemic economic collapse. I'm not saying that such a collapse will not happen (and it honestly should), but that high consumer prices will not be the catalyst. People in Europe pay the equivalent of $8.00/gal, and have for most of a decade, and their economies are still wheezing along.
In America we are much more dependent upon gas for economic growth than Europe is.....
And I'd disagree about the effects of high gas prices - the high prices in 2008 helped bring about that economic crash -
Remember that consumer spending is 70% of our economy - high gas prices led to lower consumption leading to mass layoffs and recession -
But heck we'll get to test these theories this summer and we'll see Who is correct -
I agree with you about gas prices. My wife and I have a small business located in a rural area mideway between two cities (within a 30 to 60 minute drive). In 2006, when gas prices went over $3.00 a gallon, we saw our revenues plummet Fewer and fewer people were willing to drive to buy our products. And at $4.00 a gallon we wondered how long we could remain in business.
With time and slightly lower gas prices, things improved, but with so many people out of work, our business has never done as well as before 2006.
We are not looking forward to this coming summer.
You forget to say that a good chunk of that $8/gal is Taxes. It's not the case here.
If it was not for PRICE FIXING gasoline would be $1.50 to $2 LESS Per gallon.
Also, in the 80s and 90s economists were asserting that a 10% increase in oil prices would reduce growth by 1%.
Fortunately, they were wrong but negating the influence of the cost of energy on inflation and growth of GDP is a farce.
Were salaries to go to 1980 levels adjusted for REAL inflation, growth would immediately occur since, at minimum, low salaries and pensions would have to double or perhaps triple.
Time for an immediate increase of minimum wage and low income pensions (below say$1000) by 50%. followed by an additional 25% the next 2 years.
'Put together, the above-ground derivatives market plus the underground, off-balance-sheet derivatives market total an astounding $1.4 quadrillion (that’s $1400 trillion), according to Graham Summers at Seeking Alpha.
To put that number into some kind of perspective, Summers says that the derivatives market is:
40 times the world’s total stock market
10 times the value of every stock and every bond on the planet
23 times the world’s gross domestic product
At present Bank of America holds derivatives worth approximately $75 trillion, while JPMorgan Chase (already a bank covered by the FDIC) holds another $79 trillion. By Gary North’s estimate, the banks considered too big to fail hold at least $250 trillion in derivatives."
So when a bank goes down it may open up the derivative losses to be covered by the USA taxpayer and the FDIC.
The problem is there is no possible way a bank, the taxpayer or the financial system itself can cover those losses.
It will end the monetary system as we know it -
It seems implausibly huge. But if you understand these derivatives (put and share options) from the point of the investor, then it becomes somewhat more plausible.
Warning, nerdy stuff ahead, by someone who confesses to NOT being an expert:- The aim is, if you invest in a share, you want to make your investment risk free. For each dollar you invest in the share, you need to bet against the possibility of the value of the share going down, i.e. you need to buy or sell put or get options based on that same share. The black-scholes formula tells you how much you need to buy or sell. The problem is, that value of these options based on the share are small compared to the value of the share, so you need to buy or sell a LOT of them, thus, you end up with numbers much larger than the sum you invested.
Another problem, as Iris Mack pointed out to Larry Summers before he fired her from her job as a quantitative analyst for the Harvard Management Company (she has a PhD in math from Harvard), "for voicing concern to then-university president Larry Summers’ chief of staff about the money manager’s risky use of derivatives the traders didn’t understand."
http://tpmmuckraker.talkingpointsmemo.com/2009/04/larry_summers_ignored_frightening_trading_practice.php#more
Perhaps some of those reading these postings will understand it better if we use a more familiar example: sports betting.
When you bet on a football game with a bookie you don't bet on who will win, you bet on the point spread. If the bookies in Las Vegas think the Giants will beat the Packers by seven points, and you bet on the Giants, you will get lousy odds (perhaps 1.5 to 1). So you bet $100.00 on the Giants. Then you go to another bookie and "short" the Giants by betting $50.00 (at 3 to 1 odds) that they will either lose, or win by fewer than seven points.
If the Giants win by ten points, you win $150.00 from the first bookie and pay $50.00 to the second, so you are $100.00 ahead. If the Giants don't make the point spread, you pay the first bookie $100.00 and collect $150.00 from the second one. So you are $50.00 ahead.
This looks like a great way to make a little money, but your success depends on the odds you get from the two bookies. Of course, if you want to make a lot of money, you have to make a lot of bets. If you are a securities trader, you might program your computer to make a thousand or two bets a day, each of them "guaranteed" to make a few dollars. Or tens of thousands of bets.
The thing to remember is that the bookie is the only one who makes money in the long run. Like horse players, sports bettors may have to walk home.
Your example is good until the last paragraph, where you wander off into a non sequitur. As a result, you never explain how default swaps can fail. In fact, they appear to provide a no loss situation from your example. Rather obviously, they do not provide a no loss situation.
What is missing from your account is the ability of the bookie to pay off "winning" bets. If not having enough reserve funds to pay off "winning" bets, for whatever reason, the "winning" bets will not be payed off, and those making them will lose their money. This is especially true if "losing" bets were bought on margin, and the difference cannot be paid off to the bookie. Please read the script of "The Producers" to discover what happens next.
You are correct, in that I emphasized the role of the bettor rather than that of the bookie. In fact, the AIG insurance company issued so many credit default swaps that when the subprime mortgage industry collapsed and the mortgage-based securities became worthless, the company could not pay the holders of the swaps. Bookies deal with that situation by laying-off some of the bets with other bookies (in the insurance industry it is called secondary insurance).
But your last paragraph has two conflicting statements. The first involves the bookie (AIG) being unable to pay because he is over-leveraged, and the second mentions the fate of the bettor if he makes the bets on credit. In either case the system breaks down.
The problem with your example is we don't have 2 separate bookies we are using.....
We have basically one highly interconnected, highly leveraged bookie......
And that bookie can't possibly pay the bill as it's already paid out the cash to the heads of the cartel - Or used to make other bets.....
Remember the amount of loss needed to force a bankruptcy Or default is 3%......
Actually, there may be several bookies. Remember, the credit default swaps are not regulated in any way, and they are not bought and sold on any exchange. So no one knew how many fo them AIG or any other insurance company sold. The reason they could not pay the bills when they came in is because (the swaps being unregulated), the companies selling the swaps did not have to maintain a capital reserve as a cushion (in case some of them had to be paid). The premiums were considered pure profit and passed around to brokers and executives.
Is the 'great default' just a matter of time? If Greek debt is written down by 50% and bankers take the haircut, as they well deserve, will Greece honor the remaining balance or due to lack of ability to repay seek more concessions in months to come? Won't Spain, Ireland, Italy and Portugal want similar relief? Does that not mean that CDS are in fact failed? What value do they have if holder's loses are not reimbursed? CDS are so leveraged that the house of cards that Obama and Geithner took title to may in fact collapse. We should have had a final accounting after the '08 crash. The perpetrators should have taken their haircuts then and should now be penniless in prison cells.
'We are all Greeks today' and not prepared to live like animals in the name of austerity while the two tenths of one percent hoards our happiness. 25% of the children in the world suffer malnutrition while Bill, Warren, the Waltons', Kochs', and friends hoard wealth that they can not live in, drive, eat, snort or screw. Probably all good Christians and Jews who give three mites every Sunday.
"Posh?" How do we get to pay our bills when we are too old to earn?
It is kind of sad seeing your superannuation sum being worth a lot less than what you were forced to invest, even before you take inflation into account. You get to thinking "If only I could have bought (fill in the blank e.g. gold) instead".
Reduce expense to a bare minimum. Stay healthy enough to work until you die. Some USA citizens refuse to accept SS because they do not wish to be associated with a completely corrupt system. Grow food, network, think positive and creatively. There is no material security in this world never has been, we may die at any moment. Have a pleasant day. All Power to All the People!
Thank you for voicing my sentiments on this, SJ Ryan.
NONE of this should EVER have been allowed. When the markets were deregulated, and the same wall put in place, precisely to avoid these outcomes (with the evidence of The Great Depression providing the key motivational device for its installation) done away with, the flood gates were open to greed... and now world economics have become a bonfire to the vanities of the least conscionable. They skimmed all the money from the top and left worthless shit in the barrel for the rest of us, all with the leaders' blessings.
Mary Summer Rain, a seer, predicted a collapse of the bond market in books published in the late l980's. Between this debacle, the maniacs drumming for war in Iran, and the inevitability of more violent expressions of climate chaos, the leaders who act to protect the faux economy at the expense of what's real and in stages of collapse all around us, are guilty of treason to all living forces.
What's astounding is that either people don't see what's going on, or think the government will just manage the next crisis. And try talking about these things with average people... they don't want to hear it, won't believe it, and/or may get annoyed with anyone who rains on their day to day parade.
"How Greece Could Take Down Wall Street" - But when? What's taking so long? We are witnessing a well orchestrated game of musical chairs and on a very very grand scale. Every time the music stops some two-tenths of one %er has left the circle with his satchel full. The collapse will come when THEY have taken as much of THEIR money out of the game as possible and salted it away. The remaining hollow portfolio will be your retirement, equity, savings and a IOU for US to repay the shortfall in the name of righteousness and nicknamed austerity.
The DOW is at a record high while $32 trillion in CDS are no more than a mirage. When your money takes the next big hit it will all be an illusion because it's not really there now. THEY will convince you that your hard earned money never existed in the first place. You did not lose anything. You can just make it again. It is your own fault. You willingly traded freedom for fetters with consideration of course! Don't fret, THEY have a repayment plan all laid out and the authority to enforce it in perpetuity.
If Greece does take down Wall Street, even capitalism itself, the hardest currency left will be weaponry. Gold is a soft metal.
derivatives = derives from = a mathematical equation???? Okay now I get it. In South Dakota we like to call it what it is: BULLSHIT.
Yup. The thing is, "real" assets like money and stock are actually "derived from" something else too, but only once removed (well our money used to be once removed from something real, that was a long time ago now). What's happened is an endless exponential deriving and deriving until you can't even see the "real" asset at the bottom of the rabbit hole, it is buried under so many TRILLIONS and QUADRILLIONS of "dollars" of "value."
This house of cards is ABSOLUTELY GUARANTEED to blow away, the only questions are precisely when, precisely what will be the trigger, and precisely how will we all act in the aftermath. (The post above is correct that states that we the REAL people are better off being done with the whole thing, and starting NOW to practice real cooperation with our neighbors.)
These jokers fool themselves with their own equations, the game works for some time and they get to "really" pretend they are King Midas as they strut about the world reveling in their status and power. They would have been much smarter to retain the New Deal restrictions, instead they went way further with whole new categories of computer-enabled webs of derivative insanity. "The smartest people in the room," lol.