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Genesis Posts: 71432 Incept: 2007-06-26 
KD^2 
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http://market-ticker.org/archives/1633-S....
---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2009-11-17 08:24:14
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Glasshammer Posts: 124 Incept: 2009-09-02
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When we are talking about concentration of risk we are referring to Goldman Sachs right?
2009-11-17 08:33:41
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Aztrader Posts: 4959 Incept: 2007-09-10 Scottsdale, AZ
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http://www.huffingtonpost.com/2009/11/16....
2009-11-17 08:49:07
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Maxi Posts: 83 Incept: 2009-10-13 Lander, WY
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Goldman Sachs is small potatoes compared to JP Morgan Chase when it comes to derivatives. Goldman is like a stick of dynamite and JPM is totally nuclear.
2009-11-17 08:49:09
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Glasshammer Posts: 124 Incept: 2009-09-02
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Well if we want to talk about members of the pentagram of evil: Goldman, JPM, BofA, C and WFC. "$420 trillion (and as much as $840 trillion) in IR derivs would basically wipe out anyone and everything in its path. No exceptions." -zerohedge I don't think it matters who has the biggest boom when dealing with the straw house that is our economy. My first post could substitute GS for any member of the pentagram.
2009-11-17 08:59:21
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Mike57 Posts: 352 Incept: 2009-03-10 Bethlehem, PA.
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The counterparties to the CDS toilet paper were very sophisticated investors yet they never bothered to verify that AIG had the funds to back them up. If AIG had been put into receivership the counterparties would never have been paid 100 cents on the dollar.
2009-11-17 09:05:51
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Rutben Posts: 900 Incept: 2007-07-27
Phoenix, AZ
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"The Fed did have the ability to prevent institutions over which it has supervisory authority from counting "naked" contracts without counterparty reserves to guarantee performance as "money good" hedges". Exactly. However, how could we expect an agency who couldn't even foresee the housing crisis coming to carry out its supervisory authority re. CDS? Did I miss Bernanke/Geithner ever being grilled about this? and, although I assume GS was not "investing" in naked CDS with AIG since they have always claimed "collateral", was it ever clearly established whether or not GS was party to any naked CDS with AIG?
2009-11-17 09:25:22
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Glasshammer Posts: 124 Incept: 2009-09-02
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I would rather have the IRS be the supervisory authority for CDS than the FED.
2009-11-17 09:30:21
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Statusquojoe Posts: 2397 Incept: 2008-11-20 
Land of the fees Home of the slaves.
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I would rather have good old fashioned risk be the supervisory authority for CDS and all other alphabet soup imaginations than the FED or the IRS.
---------- "In short, you are the definition of moral hazard." Senator Bunning to Bernanke
2009-11-17 09:52:27
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Tesla Posts: 8180 Incept: 2008-04-03 
Delaware
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What SQJ said. Banks want to lever up, they can take the whole risk with zero backstop, as it should be.
---------- "Neither the wisest Constitution nor the wisest laws will secure the liberty and happiness of a people whose manners are universally corrupt." Samuel Adams I'd rather die on my feet than live on my knees. - Emiliano Zapata
2009-11-17 09:55:58
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Rinkrat Posts: 11 Incept: 2009-03-04
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"It is incumbent on our government to identify the root causes of the crisis and address them" Too many politicians would rather use a crisis to advance their own personal agenda. Unfortunately,with each new crisis the politicians get better at increasing their power by convincing the mindless masses that only government action can prevent another crisis and we just need to give them the tools to save us.
2009-11-17 11:47:37
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Bustedbuck69 Posts: 191 Incept: 2009-11-10
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Gen stated: "---The financial industry has managed to get regulators to specifically exempt these products from regulation - including the requirement that capital be reserved against these products when originated. This has in turn allowed literally indefinite amounts of leverage to be carried by firms who then claim to be "hedged" against disastrous outcomes by virtue of these contracts. This claim is a lie, because a contract to do a thing without the ability to perform is no contract at all - it is a fraud.---" 1. How much capital has been reserved for these products? 2. If there is capital is it worth par? 3. Who are the originators and counter parties? 4. What is the sum total dollar volume of this risk? 5. How much has this capital be levered? 6. Which regulatory body is watching this derivative market, and investigating the size and scope? 7. Is there a trenchant effort to begin an all encompassing investigation with teeth, under current laws, as preventive financial medicine, or are TPTB dealing with this in an insouciant manner to deal with the problem AFTER A POTENTIAL BLOWUP? Once again a financial nuclear detonation ticking away, and NO TRANSPARENCY, and when this timer reaches D-day (detonation day), three guesses as to who will be holding the bag. Folks, the numbers are staggering---no incomprehensible. A snippet from a piece entitled "Global Meltdown Rule No. 1: Do the Math." LA Times---Hernando de Soto. Sound familiar---here we are again with that pernicious, pesky, and reality conundrum created by MATH. "---The Securities and Exchange Commission estimates that derivative paper is worth $596 trillion (10 times the value of total world production), while studies at the Bank for International Settlements in Basel, Switzerland, conclude that it could be twice as much -- $1.2 quadrillion. And exactly how many of those derivatives are actually nonperforming and would have to be surgically removed to stop their toxicity from spreading and destroying trust among creditors and investors? Nobody knows that for sure either. U.S. Treasury Secretary Timothy F. Geithner has set aside $1 trillion to assist in buying those toxic assets, but the SEC has guesstimated that there might be upward of $3 trillion worth.---" $1,200,000,000,000,000----YIKES, WE ARE APPROACHING LIGHT YEAR NUMBERS, on a finite sized rock. Entire piece: http://www.latimes.com/news/opinion/comm....
2009-11-17 12:57:32
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Genesis Posts: 71432 Incept: 2007-06-26
KD^2
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NOTIONAL NUMBERS ARE MEANINGLESS. Tell me how much NET exposure exists. Good luck - I've been trying to get a handle on that for more than two years, without success. ---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2009-11-17 13:03:22
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Phirang Posts: 8824 Incept: 2008-10-25
bar khoba's revenge
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This whole thing is so pathetic it's obnoxious. Expectations are low enough that even a slap on the wrist will please the mob. ---------- The Treasury can issue debt on your behalf because the State can and will stomp the wealth out of you and your family.
2009-11-17 13:04:49
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Genesis Posts: 71432 Incept: 2007-06-26
KD^2
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Not if the wrist slap comes from the boiled rope coming taut.... yeah, I know, I'm dreaming.
---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2009-11-17 13:05:20
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Rutben Posts: 900 Incept: 2007-07-27
Phoenix, AZ
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"NOTIONAL NUMBERS ARE MEANINGLESS. Tell me how much NET exposure exists. Good luck - I've been trying to get a handle on that for more than two years, without success". Exactly, again. I've asked several times if anyone knew what accounting entries both GS and AIG (or any parties to a CDS contract) make upon entering into a CDS contract. Only after deciphering the fiction of these entries will we be able to know the NET exposure. Until proven otherwise, I will assume the worst, i. e. that both sides are using VAR (value at risk) "modeling" to their own advantage and there is no way these positions would net out if the CDS contract were voided. Even under the rosiest assumption, eg. the 300:1 multiple in the Citigroup-Morgan Stanley lawsuit, the net amount at risk as % of the notional would still be in the trillions. Agree with notional being meaningless with caveat "as long as Fed cannot get away with paying for more naked CDS" since that would be Galt time.
2009-11-17 13:46:02
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Bustedbuck69 Posts: 191 Incept: 2009-11-10
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"NOTIONAL NUMBERS ARE MEANINGLESS. Tell me how much NET exposure exists--" Gen 100% in agreement. For those not in the know, like flying a plane in a white out, on a wing (no pun intended)and a prayer. Those in the know not talking--NO TRANSPARENCY. Odd---doesn't the taxpayer own a sizable chunk of AIG and C? Don't worry, be happy, green shoots are here, we got a handle on this. YUP! Last modified:
2009-11-17 15:45:43 by bustedbuck69
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Bertdilbert Posts: 16 Incept: 2008-12-22
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Karl, I think you need to say more about the interest rate dirivatives that total 0ver 437 TRILLION in notational value and have a market value of over 15 TRILLION. This is intrest rate insurance that the banks write to each other. At the very least, banks are claiming 15 trillion in market value on these contracts. Like AIG I doubt that there is 15 tirllion to cover these bets that remove interest rate risk to the paper the banks are holding. Really! 15 trillion in market value as reported by the Bank of International Settelements! http://www.bis.org/statistics/otcder/dt1....
2009-11-17 17:38:23
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Rutben Posts: 900 Incept: 2007-07-27
Phoenix, AZ
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This statement ("Goldman Sachs has consistently said its exposure with AIG was collateralized and hedged and therefore we had no direct credit exposure," Goldman Spokesman Michael DuVally said. "Given the hedges, collateral, and government backing as a result of the bailout, the additional risks of declining market values in the event of an AIG default are a moot point."), taken from the Sigtarp report posted in another thread, gets us a little closer to some answers. "No direct credit exposure" now includes "backing as a result of the bailout". Don't believe GS had ever mentioned "bailout" as a mitigator of risk. One could easily infer that "hedges" means naked CDS, that knowing collateral was grossly insufficient was "moot" because of bailout and lastly that they knew a bailout was forthcoming, otherwise GS could not have claimed, before the fact, to be collateralized and hedged while knowing that was not possible without a bailout.
2009-11-18 13:22:37
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