Thread: Credit Default Swaps: The More You Know

60 Minutes' Steve Kroft examines the complicated financial instruments known as credit default swaps, and reveals how these little-known derivatives played a central role in precipitating the current market meltdown. In essence, speculators bet that homeowners wouldn't be unable to pay back their mortgages, and when those people started defaulting and the speculators tried to cash in their wagers, there was no money to cover the literally trillions of dollars in payouts. What it really boils down to is an unregulated gambling racket that Congress voted unanimously to create and legalize.

60 Minutes: The bets that brought down Wall St. | Crooks and Liars

For the 'less regulation' ninnies still running around, peddling their nonsense.

Originally Posted by Ronin Tetsuro

60 Minutes: The bets that brought down Wall St. | Crooks and Liars

For the 'less regulation' ninnies still running around, peddling their nonsense.

This is a great post. I'm sure you will hear a shit load of "caveat emptor!" being screamed by the "libertarian" kooks of the forum. Unfortunately for the public, one cannot beware when the entire market is corrupt.

From the video:

"It's legalized gambling. And we made it legal gambling. [...] With absolutely no regulatory control."

What say you, apologists?

I think the dims need to be held accountable for fucking this country up.

Originally Posted by Notmyrealname

I think the dims need to be held accountable for fucking this country up.

And your thoughts on the content of the video?

Originally Posted by Ronin Tetsuro

And your thoughts on the content of the video?

Video... you have video?

I do not understand the argument against libertarians, hell I have been warning about the derivatives market for a long time. You do not bet on nothing and win in the long run, the derivatives exist because of the banking and lending system, trying to create something from nothing. That sounds very much like the establishment more than a libertarian perspective in my book. Maybe it is the fact that it was unregulated, maybe that the argument, I don't know. That argument would be mooted by the fact that the market was not a libertarian idea. Regulations serve a purpose, and I know few libertarians that object to some regulation, but regulation does nothing, not a damn thing without transparency. Thats what has been lacking.

The confederate Dollar was fiat, it was sound as it was based on real GDP, and to ensure that you had transparency.

Now to the point of derivatives, the market is so large that it outweighs the world currencies combined. This is the crux of the melt down, not so much as sub prime, but the fractional reserve lending that the banks did without transparency with the assets of the bank, your home. Now when you have 1 167 foreclosures, add the FRL, and you have a huge derivatives problem. Again, not supported by libertarianism, but by the status quo.

Originally Posted by michaelr

Now to the point of derivatives, the market is so large that it outweighs the world currencies combined. This is the crux of the melt down, not so much as sub prime, but the fractional reserve lending that the banks did without transparency with the assets of the bank, your home. Now when you have 1 167 foreclosures, add the FRL, and you have a huge derivatives problem. Again, not supported by libertarianism, but by the status quo.

But isn't that kind of the point? It makes sense that if the market is larger than real world worth, then there's a potential for bad shit to happen. Libertarians are often the ones championing the free market as a cure for all ills. I saw this as excellent proof that we do not have a free market and that, indeed, it is not possible as long as humans exist within the equation.

Originally Posted by Ronin Tetsuro

But isn't that kind of the point? It makes sense that if the market is larger than real world worth, then there's a potential for bad shit to happen. Libertarians are often the ones championing the free market as a cure for all ills. I saw this as excellent proof that we do not have a free market and that, indeed, it is not possible as long as humans exist within the equation.

This is not free market, it is a made up bubble, something to trade even when it is nothing. This is a fault of the federal reserve. Fractional reserve lending is nor libertarian. Do you know what FRL is? I can explain it in a nutshell if you wish.

Originally Posted by michaelr

I do not understand the argument against libertarians, hell I have been warning about the derivatives market for a long time. You do not bet on nothing and win in the long run, the derivatives exist because of the banking and lending system, trying to create something from nothing. That sounds very much like the establishment more than a libertarian perspective in my book. Maybe it is the fact that it was unregulated, maybe that the argument, I don't know. That argument would be mooted by the fact that the market was not a libertarian idea. Regulations serve a purpose, and I know few libertarians that object to some regulation, but regulation does nothing, not a damn thing without transparency. Thats what has been lacking.

The confederate Dollar was fiat, it was sound as it was based on real GDP, and to ensure that you had transparency.

Now to the point of derivatives, the market is so large that it outweighs the world currencies combined. This is the crux of the melt down, not so much as sub prime, but the fractional reserve lending that the banks did without transparency with the assets of the bank, your home. Now when you have 1 167 foreclosures, add the FRL, and you have a huge derivatives problem. Again, not supported by libertarianism, but by the status quo.

I wasn't slamming Libertarians as a whole. I put the term in quotations to separate the "law of the jungle" advocates who think that anytime anyone is victimised it is their own fault and not that of the victimiser. Total "free market" cannot work. There are crooks, con artists, and just total bastards who will rape the defenseless at the drop of a hat. I think Libertarians have a lot of good and progressive ideas. Unfortunately, like with any political affiliation, there are nitwits and dickheads masquerading as the genuine article. They give the lot a black eye.