soryang
02-27-2009, 09:55 PM
Recipe for Disaster: The Formula That Killed Wall Street
by Felix Salmon
http://www.globalresearch.ca/index.php?context=va&aid=12447
interesting article above at the link. below are my remarks on the article:
This formula called a gaussian copala function or some other such nonsense allowed investment bankers and insurance companies to buy and sell risk, or as they thought "eliminate risk" for a price. The formula was based upon a short history of past performance. I guess wall street investment bankers in their go for broke drive for faustian returns never heard the expression, "past performance is no guarantee of future results." They thought they had the mathmatical formula for predicting the future. They also never imagined that (real estate) prices could go down. These are the venerable bankers and corporate eminences that govern our world. When prices go down, and the world collapses, they call it a "black swan" event. Gambling in derivatives is not overleveraged greedy speculation, it is "mispricing risk." Derivatives are not gambling unworthy of investment fiduciaries, they are mysterious "toxic assets."
Having the key to the future and the insurance to every risk, our financial parasites insured the world. They are now holding the bag for anywhere from 60 trillion to 1.4 quadrillion in leveraged liabilities. Aren't our bankers and insurers a conservative and skeptical lot? Having lost the money of all of their customers, clients, investors, bond holders, and coparties for insuring everything in the world for a reasonable commission of course, they now owe the world. But they are broke! What to do?
Oh, I know, let's let the taxpayer pay for it. That's why there is another $750 billion in the Obama budget proposal for financial bailouts in addition to the hundreds of billions already given to pour into the unfillable black hole. As now, the finance community has failed in its effort to hedge the risks of the world, the US government and taxpayer is now on the hook for the infinite gambling commitments made by Americas irresponsible financial leadership.
These people dare to speak of moral hazard and criticize plebian borrowers as the cause of our financial crisis. The truth is this crisis was caused by the super rich financial sector who have literally wrecked the world economy with their hubris and greed.
Now that Uncle Sam's treasury is on the hook in all but name only, its time to nationalize the Federal Reserve and the nationsl financial money center institutions. Throw the bums out, repudiate derivative obligations, and stop the transfer of the US treasury to corrupt financial executives. The full faith and credit of the American people is on the line.
by Felix Salmon
http://www.globalresearch.ca/index.php?context=va&aid=12447
interesting article above at the link. below are my remarks on the article:
This formula called a gaussian copala function or some other such nonsense allowed investment bankers and insurance companies to buy and sell risk, or as they thought "eliminate risk" for a price. The formula was based upon a short history of past performance. I guess wall street investment bankers in their go for broke drive for faustian returns never heard the expression, "past performance is no guarantee of future results." They thought they had the mathmatical formula for predicting the future. They also never imagined that (real estate) prices could go down. These are the venerable bankers and corporate eminences that govern our world. When prices go down, and the world collapses, they call it a "black swan" event. Gambling in derivatives is not overleveraged greedy speculation, it is "mispricing risk." Derivatives are not gambling unworthy of investment fiduciaries, they are mysterious "toxic assets."
Having the key to the future and the insurance to every risk, our financial parasites insured the world. They are now holding the bag for anywhere from 60 trillion to 1.4 quadrillion in leveraged liabilities. Aren't our bankers and insurers a conservative and skeptical lot? Having lost the money of all of their customers, clients, investors, bond holders, and coparties for insuring everything in the world for a reasonable commission of course, they now owe the world. But they are broke! What to do?
Oh, I know, let's let the taxpayer pay for it. That's why there is another $750 billion in the Obama budget proposal for financial bailouts in addition to the hundreds of billions already given to pour into the unfillable black hole. As now, the finance community has failed in its effort to hedge the risks of the world, the US government and taxpayer is now on the hook for the infinite gambling commitments made by Americas irresponsible financial leadership.
These people dare to speak of moral hazard and criticize plebian borrowers as the cause of our financial crisis. The truth is this crisis was caused by the super rich financial sector who have literally wrecked the world economy with their hubris and greed.
Now that Uncle Sam's treasury is on the hook in all but name only, its time to nationalize the Federal Reserve and the nationsl financial money center institutions. Throw the bums out, repudiate derivative obligations, and stop the transfer of the US treasury to corrupt financial executives. The full faith and credit of the American people is on the line.