So apparently, we have Naked Credit Default Swaps.
The simple story is that it’s an insurance bet between two parties that pays the difference. It’s supposed to be used as insurance or a hedge. Supposed to.
But things get a little bit interesting. -here’s the idea, they’re naked.
So we have literally degenerate layers and layers of bets backed by no collateral. A big gamble bet with nothingburgers and margarinated margin.
And let me tell you, shit is insane. You might, reasonably ask, Who underwrites these gambles?
So here’s the cool part,
You can load a bunch of CDS’s in a CDO;
But you can load CDS’s in CDO’s
And then you can gamble the CDO’s on CDO’s.
So, here’s a clip to go over synthetic Collateralized Debt Obligation;
And all of these naked contracts loaded in contracts loaded in contracts betting on funny numbers on screen. That led to a crescendo of degeneracy.
On top of naked shorts being used and leveraged right before the SEC put out an order to halt Shorting in September 2008, resulting in the Market Crashing that same September.
*Sigh*
If you thought Wall Street Bets was bad, wait until you see the Fun’d managers on Wall Street.
Yea, the more and more I learn about all these ‘bespoke’ and ‘entranched’ investment vehicles, The only thing I think of is a Financial Lambo Drag Racing into a fucking wall Hoping to achieve mach speed before the wheel fly off.
That’s what these Financial Investment Vehicles sound like.
“Hey, what did you do with the brakes?”
“Oh, we removed them for more speed”
“Oy” -Me
yea, Degenerates- the lot of them.
The Finest Degenerates that the world has ever seen, quite even finer then possibly the degenerates online.
Winners that win too much with nothing else to win, or losers that lose and have nothing left to lose. Degenerates.
Hedge Fund managers stroking their ego by getting on the cover of Forbes or some other financial magazine posting their Gain Porn after shuffling some money out of their off-shore slush fund. As if wire transferring a few numbers means anything.
And then Wall Street Betters, online degenerates that live in their parents’ basement to drink piss and shove bananas up their assholes because they lost bets. All while stroking their own ego to Loss Porn, where people literally brag about how much money they can lose.
Two side of a coin, both of them, degenerates.
Dodd Frank, was a bandaid
This interview that I’ll be quoting was the thing that helped me to learn that Naked CDO’s existed. So Synthetic Naked CDO’s. . . I’m sure our ancestors are smiling upon us now.
Dodd Frank was a sort of used bandaid that does a little to not a lot (a sham);
“I tried to pass legislation in Dodd-Frank… ‘If you’re Too-Big-To-Fail, you’re too damn big! And you should be broken up.’ I tried to pass legislation to say, ‘It shall be Illegal to have Naked Credit Default Swaps’ – You’ve gotta have an insurable interest…couldn’t get either passed.”
“. . . I mean dodd-frank passed with my vote because it does some good things and moves in the right direction but it is timid. It doesn’t- if you were going to address the real causes here -you would decide that too big to fail cannot be tolerated . . . “
-Senator Byron Dorgan
here’s some more great quotes;
“Does anybody really really believe that it is okay for financial institutions in this country to trade tens and tens and tens of trillions of dollars of credit default swaps in which they have no insurable interest on either side just making wagers- casino wagers but at least in casinos they have bright lights so you can see what they’re doing“
. . .
“Even though there were institutions too big to fail that had become bigger since the repeal of glass-steagall now they are even larger as a result of the bailouts and we still have a too big to fail doctrine because those big financial institutions and by the way they are still gambling today it isn’t shut down so they are bigger than ever I tried to pass some legislation in dodd-frank that says if you are too big to fail you’re too damn big and you should be broken up.”
Repeal Glass-Steagall -> Bigger Institutions
Bail outs -> Big institutions cannibalized Big Institutions -> Bigger Institutions
By golly gee willickers, I think we might, just be, quite, retarded.
In Closing,
If you are worried about the future, don’t be. I’ll do enough worrying for the both of us.
Because I know for a fact that there is a wealth fund manager jerking off to the thought of blowing up your pension funds by filling them to the brim with junk bonds and naked CDS’s to cover their tracks. And that’s not even a basis point worth nor an Iota of the shit I’m financially worried about. So you, believe you, me, words. I definitely have enough worry for the both of us, including yours (and mine) extended families.
Finance- Detached from the fundamentals, since the beginning of finance.
Top Shelf Degeneracy mixed with Bottom Shelf Economic Pain.
Cheers,
*Not Valid Financial, Legal, Life, or Any Advice