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TheUtopian -> RE: Obama's First Un-inherited Test (3/18/2009 1:12:38 AM)
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Let me preface this by saying that Obama's first stroke of the pen, ala his unitary powers, should have been to quash the Graham-Leach-Bliley Act ; henceforth reinstituting Glass-Steagall.
The fact there has not been a peep out of his administration mentioning a desire to re-institute Glass-Steagall, confirms for me what I've known all along : Obama is nothing more than a Wall Street Uncle Tom.
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however at the time that AIG threatened to fail, it would have been catastrophic.
'' Catastrophic'' in what regard? Are you saying the whole world might have been exposed to multiple '' Iceland’s ''?
For one, you can't be at all sure about that.....and even if were true, why should the American taxpayer be required to bail out multiple sovereign countries that engaged in extremely risky and volatile leveraged investment schemes for lucrative financial gain? The American taxpayer--as far as I know---is not a built-in indemnity clause for insurance companies who engage in extremely risky behavior.
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Now you may ask why do we care about a bunch of rich, greedy people who wanted to make money on their money? So what if they get burned. But the fact is that a lot of investment in mortgage backed securities were not individuals, but cities, counties, charities and municipalities all over the world. They invested money as a means to generate revenue without additional taxation or costs to citizens. When these investments began to fail these municipalities lost billions and billions of dollars.
That's not at all true. Within the last two weeks, Bernanke was subpoenaed to appear before a Congressional Committee to answer where the bailout money has gone / who are its recipients?
Bernanke told Bernie Sanders that he could not disclose who the bailout/counter party recipients were because it would ''breach their institutional integrity ''
Now....I don't know about you, but that doesn't sound like the money went to foreign governments and municipalities like you mention above....It instead sounds like it went to foreign banks and brokerage houses.
Then we find out two days ago that some of the counter party recipients included Goldman Sachs, at $12.9 billion, and three European banks — France's Societe Generale at $11.9 billion, Germany's Deutsche Bank at $11.8 billion, and Britain's Barclays PLC at $8.5 billion.
So, the American tax payer is essentially bailing out bilious mongrels from other countries....and perhaps the greatest of all parasites from within our own country ----Goldman-Sachs!
The scenario I see that would have transpired would have been this : AIG is seized and forced into bankruptcy by the treasury, its assets are wrapped up and then liquidated to the highest bidder.
We then see a series of chain-reaction bankruptcies by all the counter-parties entrenched in derivatives....and then any US commercial banks forced into liquidation mode has its depositors re-compensated by the FDIC....The FDIC is then re-inflated by the treasury ala the US tax payer.
The cost to let those entrenched in derivatives fail, re-compensating commercial depositors through an inflated treasury-backed FDIC, would have been infinitely less expensive than trying to unwind 1.28 quadrillion worth of negatively-leveraged derivatives.
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Monday, March 16, 2009[image]http://www2.nationalreview.com/images/blog_dotted_divider.gif[/image]
One Quadrillion Dollar Exposure? [Jonah Goldberg]
Derb! Paging Derbyshire...I need a math check. This guy says the derivative bubble equals 190,000 per person on the planet. According to various distinguished sources including the Bank for International Settlements (BIS) in Basel, Switzerland — the central bankers' bank — the amount of outstanding derivatives worldwide as of December 2007 crossed USD 1.144 Quadrillion, ie, USD 1,144 Trillion. The main categories of the USD 1.144 Quadrillion derivatives market were the following:
1. Listed credit derivatives stood at USD 548 trillion;
2. The Over-The-Counter (OTC) derivatives stood in notional or face value at USD 596 trillion and included:
a. Interest Rate Derivatives at about USD 393+ trillion;
b. Credit Default Swaps at about USD 58+ trillion;
c. Foreign Exchange Derivatives at about USD 56+ trillion;
d. Commodity Derivatives at about USD 9 trillion;
e. Equity Linked Derivatives at about USD 8.5 trillion; and
f. Unallocated Derivatives at about USD 71+ trillion. Quadrillion? That is a number only super computing engineers and astronomers used to use, not economists and bankers! For example, the North star is "just" a couple of quadrillion miles away, ie, a few thousand trillion miles. The new "Roadrunner" supercomputer built by IBM for the US Department of Energy's Los Alamos National Laboratory has achieved a peak performance of 1.026 Peta Flop per second — becoming the first supercomputer ever to reach this milestone. One Quadrillion Floating Point Operations (Flops) per second is 1 Peta Flop/s, ie, 1,000 Trillion Flops per second. It is estimated that all the data found on all the websites and stored on computers across the world totals more than One Exa byte of memory, ie, 1,000 Quadrillion bytes of data. There's a lot more, and I'll leave it to others to digest. I'll tell you what. If I had a quadrillion dollars, there would be no more NRO fundraisers.03/16 07:03 AM[image]http://www2.nationalreview.com/images/spacer.gif[/image]Share
As you'll understand after reading this small snipet - It's an impossibility to unwind all of these derivatives. And as folks likes Bernie Sanders are beginning to realize - To try and do so is the creme de la creme of throwing good money after bad.
- R
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