tag:blogger.com,1999:blog-2335748440449035592.post8968849046589250410..comments2008-10-19T22:44:56.993-04:00TraderMarkhttp://www.blogger.com/profile/06241756200482130281noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-2335748440449035592.post-57128577293840136662008-10-19T22:44:00.000-04:002008-10-19T22:44:00.000-04:00Sia they are like naked puts. My only reason to reference them as naked shorts was it makes no sense to insure MORE than the outstanding debt. The idea of insuring debt is the person who owns the debt takes out insurance. So when people who don't even own the debt take "insurance" it strikes me a lot like naked shorting. But yes they are like naked puts in terms of how they "work".TraderMarkhttp://www.blogger.com/profile/06241756200482130281noreply@blogger.comtag:blogger.com,1999:blog-2335748440449035592.post-2668720049563186552008-10-17T23:46:00.000-04:002008-10-17T23:46:00.000-04:00I was listening to Robert Reich on NPR the other day, and I got the impression that credit swaps were just a form of insurance in the event the loan (or in the case of these packaged derivatives) loans defaulted. I was surprised that TM mentioned they could be used to game the system. So I checked on Wikipedia..... There are several ways hey can be manipulated... But, while there, I found something of interest regarding Mr. Buffet. <BR/>---------------------------------------<BR/>Warren Buffett famously described derivatives bought speculatively as "financial weapons of mass destruction." In Berkshire Hathaway's annual report to shareholders in 2002, he said, "Unless derivatives contracts are collateralized or guaranteed, their ultimate value also depends on the creditworthiness of the counterparties to them. In the meantime, though, before a contract is settled, the counterparties record profits and losses--often huge in amount--in their current earnings statements without so much as a penny changing hands. The range of derivatives contracts is limited only by the imagination of man (or sometimes, so it seems, madmen)." The same report, however, also states that he uses derivatives to hedge, and that some of Berkshire Hathaway's subsidiaries have sold and currently sell derivatives with notional amounts in the tens of billions of dollars.[20] Berkshire Hathaway, with a market capitalization of $196 billion[21], certainly does have enough equity to collateralize or guarantee these contracts.<BR/>----------------------------------<BR/><BR/>jeganjeganhttp://www.blogger.com/profile/05850061548373752817noreply@blogger.comtag:blogger.com,1999:blog-2335748440449035592.post-6998532821312095592008-10-17T19:42:00.000-04:002008-10-17T19:42:00.000-04:00Don't know why you refer to the credit default swaps as naked shorting. It is more like buying put options on lehman's debt. In fact that is EXACTLY what it is. And last time I checked, buying puts is not considered 'wrong' or illegal (whether you own the stock/bond or not). The people hurt by this are the idiots that thought they could sell an infinite amount of insurance that will never be exercised (in comes AIG).Siahttp://www.blogger.com/profile/05915856696281889732noreply@blogger.comtag:blogger.com,1999:blog-2335748440449035592.post-39870398021733041472008-10-17T14:36:00.000-04:002008-10-17T14:36:00.000-04:00never heard about that movie<BR/><BR/>corruption is in all governments - we just do it in a more sophisticated way<BR/><BR/>there is very little transparency in our government and even when watchdogs cry out the American people don't care to pay attention, so the foxes live it up. Fannie and Fredie have been warned about for over a decade - but they were the 2 biggest lobbyist contributors to political campaigns. Really this special interest funding for political campaigns is the crux of so many problems it is amazing. Money always buys influence so that will never change but I have read the lobbyist population has grown something like 20 fold over the past decade or something huge - don't quote me the number but the scale is immense. While we're told "we're reforming it"<BR/><BR/>It just makes you want to move to some remote corner of the US and do your thing away from powers that be sometimes. I wish more Americans would read up and self educate because until they agitate against it, it will continue. But it appears to not be a concern for most. A lot of people struggle enough with just getting by day to day.TraderMarkhttp://www.blogger.com/profile/06241756200482130281noreply@blogger.comtag:blogger.com,1999:blog-2335748440449035592.post-4360419308633423792008-10-17T14:35:00.000-04:002008-10-17T14:35:00.000-04:00woops, this post was made for the 10000 hedge fund layoff, I didnt mean taxpayers, big woops, lolGreghttp://www.blogger.com/profile/08278191046264027245noreply@blogger.comtag:blogger.com,1999:blog-2335748440449035592.post-79358837084405790702008-10-17T14:32:00.000-04:002008-10-17T14:32:00.000-04:00I couldnt be much happier for this, let them live recession style just like they put America in. Quote from Ray Finkles mom: they should die of ghonnorheaGreghttp://www.blogger.com/profile/08278191046264027245noreply@blogger.comtag:blogger.com,1999:blog-2335748440449035592.post-86624094838403677362008-10-17T14:19:00.000-04:002008-10-17T14:19:00.000-04:00wow, how does the small guy have a chance?<BR/>I thought corruption was a thing of the developing world, but it's done here on a much bigger scale, under the umbrella of the US govt, and an official face ie Paulson etc.<BR/>Almost makes me throw up and give up.<BR/>Have you watched - Zeitgeist, The movie?<BR/>I would love your perspective on that, i watched most last night and am very confused in terms of what to think of the future.... is this doomsday scenario, depression, inflation, food shortage, war, going to play out?<BR/>Talked to a guy in San Fran who sat beside Perkings(economic hitman) on a plane once. Told me shocking stories....<BR/>CheersNL Thinkerhttp://www.blogger.com/profile/06957695945576675327noreply@blogger.com