[Cid_Yama]

As the world slips into recession, it is also on the brink of a synthetic CDO cataclysm that could actually save the global banking system. It is a truly great irony that the world’s banks could end up being saved not by governments, but by the synthetic CDO time bomb that they set ticking with their own questionable practices during the credit boom. Alternatively, the triggering of default on the trillions of dollars worth of synthetic CDOs that were sold before 2007 could be a disaster that tips the world from recession into depression. Nobody knows, but it won’t be a small event.
link

[Zardoz]

How many times do you think I'll need to read it to understand it?

I get the gist of it, though: We've all been had, big-time, by a rogues' gallery of the most accomplished swindlers of all time, and they're going to get away with it.

[Cid_Yama]

The point was, this is probably what all this "keeping it all going" is all about. Til now it seemed this was just putting off the inevitable. Seems there is one last big scam waiting to be triggered that will transfer the last of the planet's wealth to the elite.

[uNkNowN ElEmEnt]

$this->bbcode_second_pass_quote('', 'I')f the list of defaults – full and partial – gets to nine, then a mass transfer of money will take place from unsuspecting investors around the world into the banking system. How much? Nobody knows, but it’s many trillions.
But for the banks, it’s happy days. Suddenly, when the ninth reference entity tips over, they will be flooded with capital. It’s possible they will have so much new capital, they won’t know what to do with it.

[bodigami]

What is a CDO?

[Zardoz]

$this->bbcode_second_pass_quote('bodinagamin', 'W')hat is a CDO?

[retiredguy]

If this is true, and does come to pass, the revolution will truly begin.

There will be blood.

[Cid_Yama]

<i>It offers a highly-rated, investment-grade, fixed-interest product paying a 1 or 2 per cent premium. Those investors who bother to read the fine print will see that they will lose some or all of their money if seven, eight or nine of a long list of apparently strong global corporations go broke. In 2004-2006 it seemed money for jam. The companies listed would never go broke – it was unthinkable.

Here are some of the companies that are on all of the synthetic CDO reference lists: <b>the three Icelandic banks, Lehman Brothers, Bear Stearns, Freddie Mac, Fannie Mae, American Insurance Group, Ambac, MBIA, Countrywide Financial, Countrywide Home Loans, PMI, General Motors, Ford and a pretty full retinue of US home builders</b>.

In other words, the bankers who created the synthetic CDOs knew exactly what they were doing. These were not simply investment products created out of thin air and designed to give their sales people something from which to earn fees – although they were that too.

They were specifically designed to protect the banks against default by the most leveraged companies in the world. And of course the banks knew better than anyone else who they were.</i>
link

How much does GM and Ford being on the list have to do with the strong push not to bail them out? The banks need them to fail to collect.

[Zardoz]

$this->bbcode_second_pass_quote('Cid_Yama', 'H')ow much does GM and Ford being on the list have to do with the strong push not to bail them out? The banks need them to fail to collect.

[ReverseEngineer]

$this->bbcode_second_pass_quote('Cid_Yama', 'T')he point was, this is probably what all this "keeping it all going" is all about. Til now it seemed this was just putting off the inevitable. Seems there is one last big scam waiting to be triggered that will transfer the last of the planet's wealth to the elite.

[Cid_Yama]

$this->bbcode_second_pass_quote('Zardoz', '')$this->bbcode_second_pass_quote('Cid_Yama', 'H')ow much does GM and Ford being on the list have to do with the strong push not to bail them out? The banks need them to fail to collect.

[phaster]

Read the article twice and can't buy into the conspiracy theory because it makes no sense to try destroy the "system" in order to collect an amount of money that can't ever be realized. Essentially it looks to me like nested derivatives that hopeful speculators bought and traded, over and over again, and over...

We'll start off by looking at the idea of "credit default swaps" otherwise known as CDS, which was a bet often between people who didn't actually own the underlying security. The basic idea of a CDS from what I understand is to think of it like homeowners insurance, because the buyer pays a premium and, in return, receives a sum of money if a specified event occurs BUT, unlike homeowners insurance the buyer of a CDS contract does not need to own the underlying security, in fact the buyer does not even have to suffer a loss from the default event.

In other words think of CDS as me trying to find someone else who is willing to take my bet that the home of some poor fool who thought they were going to get rich by buying a McMansion in Las Vegas (aka Lost Wages), was going to eventually default. If the poor sucker in "Lost Wages" defaults on their mortgage then I collect my bet. We have to keep in mind that a few years ago in the middle of the real estate boom, most everyone thought that prices of real estate could only go up, so the person who took my bet on the person who bought a house in Lost Wages would default thought it was easy money and didn't ever consider it a remote possibility that people would default on homes in Lost Wages, so that person who took my initial bet never set aside any money I paid him...

Instead we get to the next level of this financial mess which was to collected a bunch of "sure" bets like the one I made against the fool who wanted to live large in Lost Wages, and pooled them together. In other words I think of a synthetic CDO as a collection of CDS. So basically the guy that took my inital bet about a guy in Lost Wages defaulting on a loan, used the money I gave him in periodic payments, took a cut of the action put my wacky bet into an office pool with other bets of people in other cities like Florida, California, etc.

To "insure" that the office pool was safe, one office took out a policy with another office doing pretty much the same thing, and so on and so on...

IMHO what happened in this current economic crisis is lots of group think that leveraged wacky side bets within other nested wacky side bets. Pretty much as long as the amounts of "bets" and premiums paid kept flowing, and the summation of "bets" were small, everyone who believed nothing could go wrong kept on playing their part in the ponzi scheme which I knew (with a math and science background) had to had to eventually end.

If there is some evil mastermind who planned this from the start, I'd like to be the first one to congratulate them because if ya think about the permutations and probability need to get the desired outcome of a single individual or small group taking over the world, the odds would be akin to finding a specific grain of sand that a single individual dips in pink paint and thrown someplace on this planet (among all the grains of sand).

We all tend to fall back on ideas we learned in school (or at least I do), so in general I kinda think of all the CDS contracts pooled together in CDO, or what ever fancy name the financial wizzards dreamed up as annihilation operators on the real economy, and what I think is needed is something to nullify the harmful uncertain effects so if I were god, I'd impose a 100% tax on profits on all these wacky contracts (using the concept of creation and annihilation operators in quantium physics)

en.wikipedia.org/wiki/Creation_and_annihilation_operators

Figure if all the leveraged derivative contracts were suddenly stopped that hedge funds, banks, etc. were using as an infinite personal fractional reserve system then things in the real economy would being to heal.

BTW the real reason I dropped in was to post a link to a pod cast I listened to this morning, just east of San Diego is an area that is being hit hard by nation's economic problems

http://www.kpbs.org/radio/these_days;id=13377

they were reporting something like 25% unemployment
























$this->bbcode_second_pass_quote('Cid_Yama', '')$this->bbcode_second_pass_quote('Zardoz', '')$this->bbcode_second_pass_quote('Cid_Yama', 'H')ow much does GM and Ford being on the list have to do with the strong push not to bail them out? The banks need them to fail to collect.

[Cid_Yama]

Look at that list, and tell me they weren't aware that these companies were set for a fall. They hit nearly all of them.

They didn't need to know all the permutations, they just needed to know the big picture and who the big players were.

That's the difference between top-down thinkers and bottom-up thinkers.

Bottom-up thinkers think everything is hidden in the gazillion details, top-downers see the big picture and don't need the details to see the trend.

lt also, doesn't mean they are not aware that the failing of GM and Ford is in their best interests and are acting in a consistent manner.

Just because you can't collect every last penny doesn't mean there isn't great profit and power to be accrued.

They've destroyed the system several times over the last 200 years, and that certain few profited greatly every time.
link

[Cid_Yama]

<b>'Debt' is the 'Chains that bind us'</b>

The grasp and grab for resources, including and most obviously oil and gas, has been going on since the end of World War II in its current state. It was spoken about openly when the media was more constrained and less widely available. <b>Churchill spoke eloquently about how debt was a far better weapon against rowdy natives than the Gestapo or the state-capitalists in the Soviet Union’s KGB.

Debt would allow “great men” to reach their destiny without insufferable wretches, the public, getting in their way. Institutionalize debt internationally and it would also allow great nations to rule quietly and with Adam Smith’s “silent hand.” “Or else we should be forever trapped within our mansions.” said Churchill.</b>

Adam Smith however would today be classed as a left wing economist, the Joseph Stiglitz of his age. He wrote, also eloquently, about how markets needed justice in order to function, otherwise the merchant class would spew despair and misery around the world. He was correct.

http://www.resourceinvestor.com/pebble.asp?relid=37183

[phaster]

the list of CDS bonds is made up of a finite number of "big" players for the reason they appeared to be rock solid, in other words it would not make sense to try and bet against unknown companies (like joe's porn shop, or jane's dress boutique at the local strip mall).

The other reason I'd kind of cynic about a super mastermind or new world order organization able to cash in on the chaotic nature of the economy, don't think anyone expected the drastic decline in prices in stocks and commodities most likely due to deleveraging and margin calls. Even if ya netted, with the perfect hedge theory, ya have to consider that counterparties did not have sufficient reserves to pay off their bets (which is one reason hedge funds and banks are having to sell everything). Basically all the big players were leveraged, and there was leverage, upon leverage.

I'd suggest in these "interesting" times When Not In Control, People Imagine Order

http://www.npr.org/templates/story/stor ... d=95345337

I'm not suggestion that along the way that some "financial" group did not try and game the system to their advantage, but I stand by my thesis that given the complexity of the system and the infinite number of combinations, I find it very unlikely that super mastermind or new world order organization laid out the perfect plan to profit from current economic crisis. I'll admit some one or something is going to head the new world order, but most likely it will be due to random chance, having the right connections and skill set.

This would be akin to Obama being seleced president elect, if ya look at his back ground, it was highly unlikely that a mixed race kid, from a lower social/economic class could plan and scheme his way into the whitehouse (contrary to conspiracy theoristist), instead I look to quantium mathamatics which states there is random probibility involved in the real world.

In other words just because I don't seen a nefarious world order does not mean it does not exist, likewise its just as likely the cluster phuck of an economy is occuring due to random chance!




















$this->bbcode_second_pass_quote('Cid_Yama', 'L')ook at that list, and tell me they weren't aware that these companies were set for a fall. They hit nearly all of them.

They didn't need to know all the permutations, they just needed to know the big picture and who the big players were.

That's the difference between top-down thinkers and bottom-up thinkers.

Bottom-up thinkers think everything is hidden in the gazillion details, top-downers see the big picture and don't need the details to see the trend.

lt also, doesn't mean they are not aware that the failing of GM and Ford is in their best interests and are acting in a consistent manner.

Just because you can't collect every last penny doesn't mean there isn't great profit and power to be accrued.

They've destroyed the system several times over the last 200 years, and that certain few profited greatly every time.
link

[Cid_Yama]

<i>I'm not suggesting that along the way that some "financial" group did not try and game the system to their advantage, but I stand by my thesis that given the complexity of the system and the infinite number of combinations, I find it very unlikely that super mastermind or new world order organization laid out the perfect plan to profit from current economic crisis.</i>

And I have said nothing about supermasterminds or new world orders. And there is no complexity when looked at from the top-down.

It was easy to see who were the biggest players, the most leveraged.

It was simple to see the potentional for destruction from delevraging.

Hedging against loss is common practice.

Once you are in the situation where deleveraging is a fact and you are dependent on your hedge for survival, your interests change sides and lie with the failing of those companies to trigger the clause that saves your angus.

Thus you fight to prevent the bailout of those companies. <i>Your salvation is absolutely dependent on it.</i>

Do you think they are not aware of this? Please!

See! Requires no complex conspiracy, no conspirators, only where the interests of the writers of these synthetic CDOs lie.

The fact that the writers of these instruments happen to be calling the shots, is determining who is getting bailed out and who is not.

Yes, it is being gamed, now in real time. It is a financial war that will determine who survives and who does not.