Wall St is a Gang of Addicts Who Use Government To Rig The Market So They Can Steal Your Money To Support Their Gambling Addiction - Casino Capitalism and the Derivatives Market
Posted by freedomforall 3 months, 1 week ago to Economics
Excerpt:
"Derivatives are basically just bets, which are sold as “insurance” — protection against changes in interest rates or exchange rates, defaults on loans and the like. When one of the parties to the wager has a real economic interest to be protected – e.g. a farmer ensuring the value of his autumn crops against loss — the wager is considered socially valuable “hedging.” But most derivative bets today are designed simply to make money from other traders, degenerating into what has been called “casino capitalism.”
In 2008, derivative trading brought down investment bank Bear Stearns and international insurer A.I.G. Both institutions could not be allowed to fail, because the trillions of dollars in credit default swaps on their books would have been wiped out, forcing their counterparty banks and financial institutions to write down the value of their own risky and now “unhedged” loans. Bear and A.I.G. were bailed out by the taxpayers; but the Treasury drew the line at Lehman Brothers, and the market crashed.
Under the rubric of “no more bailouts,” the Dodd Frank Act of 2010 purported to fix the problem by giving derivatives special privileges. Most creditors are “stayed” from enforcing their rights while a firm is in bankruptcy, but many derivative contracts are exempt from these stays. Counterparties owed collateral can grab it immediately without judicial review, before bankruptcy proceedings even begin. Depositors become “unsecured creditors” who can recover their funds only after derivative, repo and other secured claims, assuming there is anything left to recover, which in the event of a major derivative crisis would be unlikely. We saw this “bail-in” policy play out in Cyprus in 2013.
That’s true for deposits, but what of stocks, bonds and money market funds? Under the Uniform Commercial Code (UCC) and the Bankruptcy Act of 2005, derivative securities also enjoy special protections. “Safe harbor” is provided to privileged entities described in court documents as “the protected class.” Derivatives enjoy “netting” and “close-out” privileges on the theory that they are a major source of systemic risk, and that allowing claimants to jump ahead of other investors in order to net and close out their bets reduces that risk. However, critical analysis has shown that derivative “super-priority” in bankruptcy can actually increase risk and propel otherwise viable financial entities into insolvency.
It is also highly inequitable. The collateral grabbed to close out derivative claims may be your stocks and bonds."
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Wall St thieving scum stealing from innocent investors with Looting Government Traitors As Conspirators.
D.C. NIFO
"Derivatives are basically just bets, which are sold as “insurance” — protection against changes in interest rates or exchange rates, defaults on loans and the like. When one of the parties to the wager has a real economic interest to be protected – e.g. a farmer ensuring the value of his autumn crops against loss — the wager is considered socially valuable “hedging.” But most derivative bets today are designed simply to make money from other traders, degenerating into what has been called “casino capitalism.”
In 2008, derivative trading brought down investment bank Bear Stearns and international insurer A.I.G. Both institutions could not be allowed to fail, because the trillions of dollars in credit default swaps on their books would have been wiped out, forcing their counterparty banks and financial institutions to write down the value of their own risky and now “unhedged” loans. Bear and A.I.G. were bailed out by the taxpayers; but the Treasury drew the line at Lehman Brothers, and the market crashed.
Under the rubric of “no more bailouts,” the Dodd Frank Act of 2010 purported to fix the problem by giving derivatives special privileges. Most creditors are “stayed” from enforcing their rights while a firm is in bankruptcy, but many derivative contracts are exempt from these stays. Counterparties owed collateral can grab it immediately without judicial review, before bankruptcy proceedings even begin. Depositors become “unsecured creditors” who can recover their funds only after derivative, repo and other secured claims, assuming there is anything left to recover, which in the event of a major derivative crisis would be unlikely. We saw this “bail-in” policy play out in Cyprus in 2013.
That’s true for deposits, but what of stocks, bonds and money market funds? Under the Uniform Commercial Code (UCC) and the Bankruptcy Act of 2005, derivative securities also enjoy special protections. “Safe harbor” is provided to privileged entities described in court documents as “the protected class.” Derivatives enjoy “netting” and “close-out” privileges on the theory that they are a major source of systemic risk, and that allowing claimants to jump ahead of other investors in order to net and close out their bets reduces that risk. However, critical analysis has shown that derivative “super-priority” in bankruptcy can actually increase risk and propel otherwise viable financial entities into insolvency.
It is also highly inequitable. The collateral grabbed to close out derivative claims may be your stocks and bonds."
-------------------------------------------------
Wall St thieving scum stealing from innocent investors with Looting Government Traitors As Conspirators.
D.C. NIFO
The market under Biden has been...bad, unpredictable, illogical, extremely odd. Any of those adjectives apply. I've relied most successfully on trend following over the years and it doesn't apply anymore. Doesn't work. For the fundamentalists... I've seen way too many examples of corporations having very good news only to see them tank. Some of the news stories have turned out to be complete lies. The market trickery has been broad and relentless. This is different than how it was under Obama when Hillary would send out tweets and public comments about certain stocks - clearly manipulating the market, directing her cronies to short and buy puts on certain stocks. I know well enough to follow the political intelligence but a couple times my holdings were in her crosshairs and I didn't catch it in time. That was painful.
They take no risk, screw their customers by taking positions opposite of what they
recommended, and when their bets fail they get bailed out and receive bonuses for failure.
Prosecute and execute the thieving scum and all their conspirators for treason.