i do love the amish but its too bad they will be first people to be killed and will be most defenseless and all there farms will be stolen and there women raped and villages pillaged cause they dont believe in violent resistence and have no guns to protect themselves mormons are much less forgiving. the more extreme mormons even have there compounds and fortresses. they got there issues too but frankly its the only damn option i will have outside of fleeing the country
yes, if something really bad were to happen we will be helping as many people as possible. we could even use help now, we try to help as many families as we can who are suffering from the current economics... Could always use a sincere and loving pair of hands to help others... thanks
Chances are the Mormons won't let you in. i think they have their own posse of enforcers and unless you could prove your contribution to their society, you won't get in the gate. New Zealand would be interesting until the boatloads of drunken aussies start showing up I would head back to Tx to the farm or try to stake out a cabin up in the hills somewhere around here.
Unless we understand derivatives- how leveraged the global debt really is- we won't understand why the gloom and doom guys are now speaking their mind. Debt has been the problem all along. I have tried to make that the point in every post I've made. The credit bubbles of the last 20 yrs have been leveraged out the gazoo. The more research on derivatives you do the better... Here is a short history- link The Anatomy of a Bubble Until recently, most people had never even heard of derivatives; but in terms of money traded, these investments represent the biggest financial market in the world. Derivatives are financial instruments that have no intrinsic value but derive their value from something else. Basically, they are just bets. You can "hedge your bet" that something you own will go up by placing a side bet that it will go down. "Hedge funds" hedge bets in the derivatives market. Bets can be placed on anything, from the price of tea in China to the movements of specific markets. "The point everyone misses," wrote economist Robert Chapman a decade ago, "is that buying derivatives is not investing. It is gambling, insurance and high stakes bookmaking. Derivatives create nothing."1 They not only create nothing, but they serve to enrich non-producers at the expense of the people who do create real goods and services. In congressional hearings in the early 1990s, derivatives trading was challenged as being an illegal form of gambling. But the practice was legitimized by Fed Chairman Alan Greenspan, who not only lent legal and regulatory support to the trade but actively promoted derivatives as a way to improve "risk management." Partly, this was to boost the flagging profits of the banks; and at the larger banks and dealers, it worked. But the cost was an increase in risk to the financial system as a whole.2 Since then, derivative trades have grown exponentially, until now they are larger than the entire global economy. The Bank for International Settlements recently reported that total derivatives trades exceeded one quadrillion dollars – that's 1,000 trillion dollars.3 How is that figure even possible? The gross domestic product of all the countries in the world is only about 60 trillion dollars. The answer is that gamblers can bet as much as they want. They can bet money they don't have, and that is where the huge increase in risk comes in. Credit default swaps (CDS) are the most widely traded form of credit derivative. CDS are bets between two parties on whether or not a company will default on its bonds. In a typical default swap, the "protection buyer" gets a large payoff from the "protection seller" if the company defaults within a certain period of time, while the "protection seller" collects periodic payments from the "protection buyer" for assuming the risk of default. CDS thus resemble insurance policies, but there is no requirement to actually hold any asset or suffer any loss, so CDS are widely used just to increase profits by gambling on market changes. In one blogger's example, a hedge fund could sit back and collect $320,000 a year in premiums just for selling "protection" on a risky BBB junk bond. The premiums are "free" money – free until the bond actually goes into default, when the hedge fund could be on the hook for $100 million in claims. And there's the catch: what if the hedge fund doesn't have the $100 million? The fund's corporate shell or limited partnership is put into bankruptcy; but both parties are claiming the derivative as an asset on their books, which they now have to write down. Players who have "hedged their bets" by betting both ways cannot collect on their winning bets; and that means they cannot afford to pay their losing bets, causing other players to also default on their bets. The dominos go down in a cascade of cross-defaults that infects the whole banking industry and jeopardizes the global pyramid scheme. The potential for this sort of nuclear reaction was what prompted billionaire investor Warren Buffett to call derivatives "weapons of financial mass destruction." It is also why the banking system cannot let a major derivatives player go down, and it is the banking system that calls the shots. The Federal Reserve is literally owned by a conglomerate of banks; and Hank Paulson, who heads the U.S. Treasury, entered that position through the revolving door of investment bank Goldman Sachs, where he was formerly CEO. The Best Game in Town In an article on FinancialSense.com on September 9, Daniel Amerman maintains that the government's takeover of Fannie Mae and Freddie Mac was not actually a bailout of the mortgage giants. It was a bailout of the financial derivatives industry, which was faced with a $1.4 trillion "event of default" that could have bankrupted Wall Street and much of the rest of the financial world. To explain the enormous risk involved, Amerman posits a scenario in which the mortgage giants are not bailed out by the government. When they default on the $5 trillion in bonds and mortgage-backed securities they own or guarantee, settlements are immediately triggered on $1.4 trillion in credit default swaps entered into by major financial firms, which have promised to make good on Fannie/Freddie defaulted bonds in return for very lucrative fee income and multi-million dollar bonuses. The value of the vulnerable bonds plummets by 70%, causing $1 trillion (70% of $1.4 trillion) to be due to the "protection buyers." This is more money, however, than the already-strapped financial institutions have to spare. The CDS sellers are highly leveraged themselves, which means they depend on huge day-to-day lines of credit just to stay afloat. When their creditors see the trillion dollar hit coming, they pull their financing, leaving the strapped institutions with massive portfolios of illiquid assets. The dreaded cascade of cross-defaults begins, until nearly every major investment bank and commercial bank is unable to meet its obligations. This triggers another massive round of CDS events, going to $10 trillion, then $20 trillion. The financial centers become insolvent, the markets have to be shut down, and when they open months later, the stock market has been crushed. The federal government and the financiers pulling its strings naturally feel compelled to step in to prevent such a disaster, even though this rewards the profligate speculators at the expense of the Fannie/Freddie shareholders who will get wiped out. Think about how leveraged things are and you begin to see past CNNspin, FOXfaux, Fedfarce, and Politicalposture.
I still don't understand derivatives. If somebody is on the losing side, then somebody will get paid on the winning side. Where did the money go, if the winning side didn't get paid because the loser defaults?
Well thats why the above number is misleading in that while the notional value of contracts may be that amount, there are 2 things to remember: 1. Much of this is between the same companies, so the net effect isn't quadrillions of dollars. 2. This is on the face value, not the amount one would see on losses...ie, if someone guaranteed your home mortgage, the guarantee's notional amount may be $200k, but really, for that amount of loss, your house would have to have 0 value as opposed to say a 30% drop (implying a 60k loss vs 200k).
agree somewhat, derivatives do not guarantee homes, the loans are sold, there are contracts to set protections on defaults. In other words dirivative type instruments (I think)protect paper not assets. Also, they are not sold within financials but they are marketed like everything else. But I do not think the derivative exposure is actually over 100 trillion unless the whole system collapses. It is the short term impact of how leveraged the debts are that causes big risk, for instance is 100 billion$$ of sub prime loans were sold and then derivatives used to profit based upon the assumption that home values hold and defaults stay very small then an increase in defaults and a drop in home value would send tidal waves through the derivative markets.... putting tremendous pressure on the financials involved. I'm not sure any economist can really get the full picture of how much derivative losses we are currently trying to manage. I know very little on finance (that's obvious) but I understand how debt works and those fundementals don't change.
