A Secretive Banking Elite Rules Trading in Derivatives

[Spiderman]

Been going-on for awhile. Don't hold your breath, waiting for Big Gov to do anything.

http://www.nytimes.com/2010/12/12/bu...antage.html?hp

[lamboguy]

these instruments have been used to wreck not only the housing maket but other banks and financial institutions as well. when a financial institution smells that another institution is on the ropes they kick them in between their legs until they get knocked down. they are vicious blood suckers. they operate within the context of laws, that shouldn't be legal. what the banks are doing today is far worse than what the mobsters did in the past. if john gotti knew how easy it was to steal mucho dineros legally he would have gone that route instead of doing what he did and going to the can to finish off his life.

a few quarters ago, goldman sachs reported they made multi-billions trading these markets, during the whole quarter they only had 1 losing day. that is like anyone on this board betting horse for 3 straight months and only losing 1 day. that is impossible to do unless you can rig the game. the last quarter goldman sachs slipped they lost 3 days and made a little less money from their 'trading desks"

[DJofSD]

The last line says it all:

“Fundamentally, the banks are not good at self-regulation,” Mr. Lubke said in a panel last March at Columbia University. “That’s not their expertise, that’s not their primary interest.”

This is just anothe example why former SEC chairamn Cox should be hung on the yardarm.

[slewis]

Originally Posted by DJofSD

The last line says it all:



This is just anothe example why former SEC chairamn Cox should be hung on the yardarm.

Could you explain exactly what jurisdiction the SEC has over the interbank derivative market?

[slewis]

Originally Posted by lamboguy

these instruments have been used to wreck not only the housing maket but other banks and financial institutions as well. when a financial institution smells that another institution is on the ropes they kick them in between their legs until they get knocked down. they are vicious blood suckers. they operate within the context of laws, that shouldn't be legal. what the banks are doing today is far worse than what the mobsters did in the past. if john gotti knew how easy it was to steal mucho dineros legally he would have gone that route instead of doing what he did and going to the can to finish off his life.

a few quarters ago, goldman sachs reported they made multi-billions trading these markets, during the whole quarter they only had 1 losing day. that is like anyone on this board betting horse for 3 straight months and only losing 1 day. that is impossible to do unless you can rig the game. the last quarter goldman sachs slipped they lost 3 days and made a little less money from their 'trading desks"

So I guess using your theory of wrecking lives, if you invested all of your 401K in one particular stock and that company went bankrupt, the entire theory of the securities industry should be shut down?

The derivatives didn't bankrupt AIG, the traders trading them did.

Goldmans traders, I guess, are just better then everyone else's. They go into work on Monday morning with the same market opportunities other institutions have. NO ONE knows by Friday where the markets will close, it's their jobs as traders to have a "view" of where the markets will be in the future, and use PRUDENT JUDGEMENT to trade accordingly and make profit.

[lamboguy]

i watch gold trading almost on a daily basis on the comex. i see someone put up 40,000 contracts of gold to sell. those guys that claim to be the sellers, in most cases never sell the 40,000 contracts, yet other traders panic and sell theirs and push the price down. when the price comes down the same guys that had the original sells become buyers at cheaper levels.

as you know in the latest housing fiasco, goldman sachs bought up all the derivetives that AIG sold them on the bet that the housing market would collapse. the problem occured that goldman sachs made all that money but could not collect on their bets because AIG was insolvent. the government bailed out AIG so goldman could collect on their bets.

i was in las vegas when the sportsbook gary austin went bancrupt. i was holding a piece of paper that was worth $400 saying that i won a baseball bet on the yankees. no one bailed gary austins out to get me paid off on my piece of paper.

[DJofSD]

Originally Posted by slewis

Could you explain exactly what jurisdiction the SEC has over the interbank derivative market?

Let me ask a question: what monies were being used in these transactions?

[slewis]

Originally Posted by DJofSD

Let me ask a question: what monies were being used in these transactions?

There is no exchange of capital on a derivative contract until settlement.

So the short answer is no money.

[slewis]

Originally Posted by lamboguy

i watch gold trading almost on a daily basis on the comex. i see someone put up 40,000 contracts of gold to sell. those guys that claim to be the sellers, in most cases never sell the 40,000 contracts, yet other traders panic and sell theirs and push the price down. when the price comes down the same guys that had the original sells become buyers at cheaper levels.

as you know in the latest housing fiasco, goldman sachs bought up all the derivetives that AIG sold them on the bet that the housing market would collapse. the problem occured that goldman sachs made all that money but could not collect on their bets because AIG was insolvent. the government bailed out AIG so goldman could collect on their bets.

i was in las vegas when the sportsbook gary austin went bancrupt. i was holding a piece of paper that was worth $400 saying that i won a baseball bet on the yankees. no one bailed gary austins out to get me paid off on my piece of paper.

First of all, regarding the first part of your statement, if traders get bluffed into market moves, I guess they dont have enough confidence in themselves.
Too bad. I guess the traders at Goldman, as I stated, are better.

I know many traders that would take that stare down in a second, and they dont work for Goldman.
It's your 'free maket" Lambo, you know, the one the right wingers on this web site preach all the time.

The second part of your statement holds a lot of water and raises the question: "If I'm doing my job, but I take unprudent risk because of the short term profit I'll make, am I breaking the law"?

To this Lambo, you have a wonderful argument.

[Saratoga_Mike]

Originally Posted by slewis

Could you explain exactly what jurisdiction the SEC has over the interbank derivative market?

As you know, it was Larry Summers who opposed regulating the CDS market back in 1998, another one of his brillant calls. If you don't know how smart Larry is, just ask him.

[DJofSD]

Originally Posted by slewis

There is no exchange of capital on a derivative contract until settlement.

So the short answer is no money.

And when the settlement occurs, what money is used?

[slewis]

Originally Posted by Saratoga_Mike

As you know, it was Larry Summers who opposed regulating the CDS market back in 1998, another one of his brillant calls. If you don't know how smart Larry is, just ask him.

LOL... What everyone doesn't get Mike, and I've posted this previously, is that the rerason the derivative market grew so quickly is mainly because it is UNREGULATED. Plus, no "cash and carry".. which is a fancy term of no margin requirements for banks. Which means no reporting to the FED.

So for the big mouth know it all economists on PA, like Boxcrap, who in between his bible preaching tries to ram the "Govt stay out of everything" concept down our throats, this catch 22 exists. Just like the health care debate, where Health Ins corporations put profits ahead of peoples lives.

Similar concept, different industry. No Govt regulation=every man for himself=AIG=Govt bailout (or possible world war).

The stupidity of the PA experts.

[Robert Goren]

Originally Posted by lamboguy

as you know in the latest housing fiasco, goldman sachs bought up all the derivetives that AIG sold them on the bet that the housing market would collapse. the problem occured that goldman sachs made all that money but could not collect on their bets because AIG was insolvent. the government bailed out AIG so goldman could collect on their bets.

Goldman was not the only one hold derivatives from AIG when the housing market collapse. Every big investment bank had some. If the government doesn't cover the derivatives, they all become insolvent and probably take down almost every bank in the country with them.

[slewis]

Originally Posted by DJofSD

And when the settlement occurs, what money is used?

Depending on the institution. Obviously if it's a loss it comes from the institutions treasury.
If you read my earlier post you'll learn under no way shape or form are institutions required to include derivative exposure on their balance sheets.

Therefore: No SEC regulation. Sorry.

[DJofSD]

Originally Posted by slewis

Depending on the institution. Obviously if it's a loss it comes from the institutions treasury.
If you read my earlier post you'll learn under no way shape or form are institutions required to include derivative exposure on their balance sheets.

Therefore: No SEC regulation. Sorry.

OK, perhaps then you've taken me to school. So, for the moment I'll concede the point. However, if I were a share holder in any of those companies, I'd be p*ssed. And, as a taxpayer, I am p*ssed.