We live in the United States of Amnesia

[Fartspray]

http://www.consortiumnews.com/2010/080310a.html

How can we expect our children to uphold the law when "our leaders" selectively enforce the law ? We already have laws on the books to deal with most of our problems if we just enforced them.

Entitled bankers and illegal Immigration really piss me off.

[kato]

The law is selectively enforced everywhere at all levels. Friend of mine was involved in a car accident in a little town where another guy crossed the yellow line and hit him. Cops showed up, everyone stood around talking for a bit, then the other guy drove off. My friend asked what that was all about, cops said, oh, he's the mayor's son.

"Rule of Law" is an old-fashioned concept.

[L K Day]

Yeah, but it's a concept that holds the nation together. Once 51% of us no longer believe, it's over.

[gregkerzhner]

securitized sub-prime mortgages, complex credit default swaps,

derivatives are often used as a way to hedge against risk. A derivative is based on an underlying security (stock, etc..) so its not any more risky than the stock itself. the media always makes derivatives out to be a mysterious, dangerous and risky endeavour. they do this by putting the adjectives "complex" and "risky" in front of the word derivative.

That sentence is like saying "Oh, he fell off breakfast burrito because he tried using a complex and risky heel hook gaston combination."

[DriskellHR]

I live on a corner lot with a very short street that runs along my driveway with a stop sign about 30 yards from my driveway. The folks that live on that side of the street wanted somthing done about the people running the stop sign. Public works wants to make it a one way street. This will ONLY effect my driveway. Not only this they never asked me what I thought. So when I caught wind of it I raised hell.....

That brings us up to yesterday when my councilmans deputy stopped by to discuss my concerns. When he suggested that I go that way even if there is a do not enter sign. I asked him who was going to pay for my ticket when I got one for going down a oneway street? His answer "just call us we will take care of it."

ARE YOU FUCKING KIDDING ME!!

he really stood there and told me if I broke the law he would work it out so I did not have to pay for it. I looked at him and said "dude now how Backasswards is that? Dont you think thats crooked politics?" "yeah I guess" he said

well can you guess who I wont vote for douchbag?


Blew me away.........

[kato]

Yeah, but it's a concept that holds the nation together. Once 51% of us no longer believe, it's over.

Don't get me wrong, I am 100% behind this concept. But I think that probably much more than 51% of us no longer believe (or even understand!).

[kato]

A derivative is based on an underlying security (stock, etc..) so its not any more risky than the stock itself.

I hope you're not investing any money based on this statement!

[Clevis Hitch]

I think the crime was in the insurance scam that went on with it. Nobody mutual funds would buy the derivatives because they couldn't get insurance on them. That is until A.I.G. rolled the dice. The problem with these "high-risk" derivatives was they were so sketchy but they offered >20% p.a. returns. When they could finally get insurance on them. Thats when inflation kicked in. Cheap money. Everybody got in on it. The whole thing was like a ponzi scheme. (kinda like social security) When the underlying mortgages started going bad because they were inherantly flawed. (You ever heard of a "no-doc" loan? OMFG!)

There is an estimated 60 Trillion dollars in derivatives out there right now. Because of the nature of the derivatives, you can't tell which loans are bad and which are good (that causes fear in the market place, so now nobody will touch them. I think FannyMae was being traded for pennies last week.) So you can't take the derivatives apart and seperate the good from the bad.
Think of it this way. You have a thousand mortgages on your desk and 20% of them are going to default. You can't sell them and if you get caught holding them when they default then you lose, big-time. So you create a document that says that it is worth the sum total of ALL of the mortagages. Then you divide the value of the mortgages and issue bonds totaling up to the pay-off value of the mortgages, twenty years down the road. The only way that big pension funds would buy these things was if they could get insurance for the bonds. Enter AIG.

I think the whole thing can be reduced down to "Moral Hazard"

at least thats my understanding of it..

[kato]

There's more to it than that. If it was done the way you describe, it wouldn't be too bad, because it would effectively spread out the risk, exactly as it was designed to do. The real problem is that they really did divide up the loans based on quality, packaged them up separately, and then those packages were given a risk rating based on the quality of the loans in the package. So far so good- if you bought a triple A rated security, it was low risk and you paid accordingly. If you bought from the C rated package it was high risk and you knew it going in. The problem arose when they took the worst of the lot, the ones that were so bad they could not even make the riskiest level, and repackaged those into a completely different set of packages. Institutions bought those thinking the top-rated level was as safe as the top-rated level from the first group. Now they know. It's not that "you can't tell", it actually looked like someone either tried to deceive people regarding what these instruments held, or just really weren't paying attention when they rated them.

[Silk]

I think the whole thing can be reduced down to "Moral Hazard"

at least thats my understanding of it..

I'd agree and also call it stacking the deck...


http://www.traileraddict.com/clip/untit ... derivative

1:50 in...argue all you want about MM, but the math here is "bulletproof"...

You (nor I) could ever solve this equation...