asterisk2a + cds   61

The Fed Sends A Frightening Letter To JPMorgan, Corporate Media Yawns
At the top of page 11, the Federal regulators reveal that they have “identified a deficiency” in JPMorgan’s wind-down plan which if not properly addressed could “pose serious adverse effects to the financial stability of the United States.” Why didn’t JPMorgan’s Board of Directors or its legions of lawyers catch this?

It’s important to parse the phrasing of that sentence. The Federal regulators didn’t say JPMorgan could pose a threat to its shareholders or Wall Street or the markets. It said the potential threat was to “the financial stability of the United States.” [...] “…the default of a bank with a higher connectivity index would have a greater impact on the rest of the banking system because its shortfall would spill over onto other financial institutions, creating a cascade that could lead to further defaults. High leverage,
corporate  media  media  conglomerate  too  big  to  bail  too  big  to  fail  too  big  to  jail  TBTF  jpmorgan  jpmorganchase  USA  GFC  recovery  liquidity  trap  repo  liquidity  squeeze  economic  history  Financial  Stability  Board  FinancialCrisisInquiryCommission  crisis  crony  capitalism  Greed  shareholder  capitalism  profit  maximisation  profit  maximization  investment  banking  retail  banking  leverage  CDS  engineering  CDO  MBS  subprime  FDIC  complexity  Fed  Janet  Yellen  Wall  Street  reflate  reflation  derivatives  credit  bubble 
april 2016 by asterisk2a
This Letting Agent Admits The Housing Shortage Is Good News For Landlords - BuzzFeed News
[ Lord Adair Turner book & Richard Koo; banks tend 2 lend 2 property & land rather than productivity/businesses. risk averse, if the family cant pay the mortgage any more, than at least u have not lost all the money! less risky! Its also partly rentier behaviour of banks. // also BOE has to be concerned about future disposable income; rent & utilities eating up 50%-75% of income thus less for consumption! ] “Landlords’ balance sheets are looking healthier than at any point since 2014, and property investors are looking at an excellent rate of return from their portfolios.” Gill warned that changes to stamp duty announced in chancellor George Osborne’s Autumn Statement and due to take effect on 1 April – people selling buy-to-let investments will pay an extra 3% – were bad news for landlords. But overall, the “consistent and developing lack of housing for across all tenures, for a spiralling population” meant the level of demand for rental properties would not reduce, he said.
property  bubble  speculative  bubbles  asset  bubble  asset  allocation  macroprudential  policy  Generationengerechtigkeit  generation  rent  Housing  Crisis  social  affordable  distortion  ZIRP  NIRP  QE  aggregate  demand  Right  to  Buy  Buy-to-Let  Help  to  Buy  Scheme  Help  to  Save  policy  folly  policy  error  consumer  debt  household  debt  budget  deficit  recovery  mortgage  market  credit  bubble  GFC  bank  bailout  BOE  zombie  banks  rentier  rent-seeking  Richard  Koo  underinvestment  productive  investment  infrastructure  investment  zombie  consumer  industrial  policy  economic  history  Mark  Carney  financial  repression  behavioral  finance  behavioral  economics  herding  herd  hunt  for  yield  leverage  margin  trading  equity  bubble  Gini  coefficient  disposable  income  discretionary  spending  VAR  CDO  CDS  risk  aversion  squeezed  middle  class  secular  stagnation  inequality  UK  generational  contract  lost  generation  constituency  Tories  Conservative  Party  nasty  David  Cameron  George  Osborne  general  election  2015  general  election  2020  fiscal  policy  austerity  monetary  policy  liquidity  trap 
february 2016 by asterisk2a
What Really Caused the Crisis and What to Do About It - YouTube
"There are not perfect markets, and there is no perfect planner. [...] we will never arrive at perfect solutions. [...] market will never allocate perfectly ... [...] market will always tend to lend to property and land, and less into productive means (businesses = risk of 100 loss, land or property ... you have a loss when you sell it. << China, UK ) [...] not all credit is good credit. [...] need for macroprudential policy to dampen bubbles bc rate hikes could dampen normal non-speculative area of economy. ie loan to value limits [...] interest rate setting is blunt hammer that people though is the magic wand along the line of self-regulation, free market, neoliberalism and trickle-down [...] GFC can be traced back to the 60-70's - macroecon + micro with absurd assumptions (ie rational expectations, equilibriums, no bubbles) & math & pure theoretical base (no empirical analysis ie of what banks really do ie greed) = makes job of economist as policy advisor real easy.
bank  crisis  JohnMaynardKeynes  keynes  Keynesianism  book  Richard  Koo  aggregate  demand  austerity  liquidity  trap  deleveraging  balance  sheet  recession  debtoverhang  GFC  recovery  secular  stagnation  western  world  dogma  ideology  underinvestment  productive  investment  infrastructure  investment  monetary  policy  monetary  theory  trickle-down  economics  neoliberalism  neoliberal  budget  deficit  economic  history  credit  bubble  output  gap  productivity  inflation  targeting  nominal  GDP  targeting  asset  allocation  economics  investment  banking  zombie  banks  retail  banking  financial  product  CDS  CDO  hunt  for  yield  VAR  risk  aversion  deflationary  deflation  ZIRP  NIRP  QE  debt  monetisation  debt  monetization  Glass-Steagall  self-regulation  regulators  regulation  leverage  margin  trading  property  bubble  arbitrage  speculative  bubbles  asset  bubble  UK  USA  Europe  ECB  Fed  BOE  zombie  consumer  squeezed  middle  class  zombie  corporations  NPL  junk  bond  realestate  macroprudential  policy  mortgage  market  equilibrium  disequilibrium  Economist  economists  Adair  Turner  hayek 
february 2016 by asterisk2a
Vickers warns over weaker bank safety buffers - BBC News
[ no skin in the game ] The man charged with leading an inquiry into the future safety of Britain's banks has said Bank of England plans are not strong enough. Sir John Vickers, who led the Independent Commission on Banking (ICB) said: "The Bank of England proposal is less strong than what the ICB recommended." In a BBC interview, he added "I don't think the ICB overdid it." The Bank of England declined to comment. Specifically, it is the plans to make sure that banks have enough capital that Sir John has questioned. Capital is considered vital to a bank's safety, as it serves to protect it from sudden losses. It comes in many forms, but the most common is funding from shareholders, who expect a hefty return on the risk they are taking. The backdrop to this news is the current slump in bank share prices across Europe. Since the start of the year, European banking stocks have lost a quarter of their value. //&! bit.ly/1Xs0Bac
zombie  banks  retail  banking  investment  banking  toobigtofail  too  big  to  jail  TBTF  too  big  to  bail  economic  history  lobbyist  lobby  Lobbying  GFC  speculation  CDS  CDO  derivatives  Interestrateswap  financial  product  VAR  risk-management  risk  management  Greed  bonuses  bonus  financial  crisis  blackswan  Black  Swan  Career  Politicians  No  Representation  democracy  Super  Rich  1%  plutocracy  oligarchy  Wall  Street  shareholder  value  profit  maximisation  short-termism  self-regulation  regulation  deregulation  regulators  Glass-Steagall  BOE  ECB  Bundesbank  sovereign  debt  crisis  Fed 
february 2016 by asterisk2a
Jan Kregel: The Continuing Risk of Derivatives - YouTube
The other common feature that Kregel notes is that the major objective of active, global financial institutions no longer is the maximization of profits by seeking the lowest cost funds and channeling them to the highest risk-adjusted return. Rather, they are most interested in maximizing the amount of funds intermediated in order to maximize fees and commissions, thereby maximizing the rate of return on bank capital. This means a shift from continuous risk assessment and risk monitoring of funded investment projects that produce recurring flows of interest payments over time, to the identification of riskless "trades" that produce large, single payments with as much of the residual risk as possible carried by the purchasers of the package. The upshot is that most derivative packages mask the actual risk involved in an investment and increase the difficulty in assessing the final return on funds provided.
derivatives  investment  banking  retail  banking  banking  crisis  business  model  risk  aversion  ROI  VAR  CDS  Interestrateswap  financial  literacy  financial  market  financial  crisis  financial  cycle  FinancialCrisisInquiryCommission  tobin-tax  FinancialCrisisResponsibilityFee  CDO  financial  instruments  bonuses  bonus  Greed  shareholder  value  profit  maximisation  Wall  Street  economic  history  self-regulation  regulation  regulators  deregulation  Glass-Steagall  Bank  Oversight  zombie  banks  financial  product 
january 2016 by asterisk2a
"The Untouchables (2013)" PBS documentary about how the Holder Justice Department refused to prosecute Wall Street Fraud despite overwhelming evidence : Documentaries
faustian pact they've made. getting funded their elections by greedy crony capitalists. and are thus beholden to their calls they make and the framework they said they would give them funding for their campaign under. // "breakdown of internal controls [...] 60% of loans in possible portfolio did not meet its own standards, were still bought, put into portfolio" - Citigroup exec // Underfunded/understaffed/non-experience/no-stars @FBI and CIA! corporates have a bigger pocket and star lawyers who know how to position and spin. And without a Whistleblower/Leak it is nearly impossible if not for the case that the accused was really stupid and left a clear trail and or incriminates himself in paperwork/communication. // "criminal intent" //&! No Regrets at Countrywide - bloom.bg/1UptWQC //&! Countrywide’s Mozilo Said to Face U.S. Suit Over Loans - bloom.bg/1RMqPEA //&! NEW SUIT - No, the US government hasn’t forgotten about Countrywide founder Angelo Mozilo - bit.ly/1lQbEfD
GFC  banking  crisis  Greed  crony  capitalism  bank  bailout  economic  history  white-collar  crime  accounting  scandal  corporate  scandal  lobbyist  lobby  Lobbying  Career  Politicians  No  Representation  oligarchy  plutocracy  Super  Rich  1%  Fraud  securities-fraud  bonuses  bonus  financial  incentive  financial  literacy  FinancialCrisisInquiryCommission  Mozilo  CountrywideFinancial  Angelo  Mozilo  subprime  NINJA  Loan  non-performing  NPL  CDS  CDO  citigroup  misselling  misrepresentation  Consumer  Protection  misleading  Positioning  PR  spin  doctor  manufactured  consent  Whistleblower  Eric  Holder  presidency  barackobama  Party  Funding  Justice  System  economic  injustice  Washington  revolving  door  accountability  due  diligence  miconduct 
january 2016 by asterisk2a
BBC Documentary - The Money Trap - How Banks Control the World Through Debt - YouTube
most profitable credit card debt customers are those making just the minimum payment. ... a credit card being a statement of status! retaining customers by upgrading them regularly w higher limits, new colors, new perks (they will never use). // unsecured lending - DEFINITION of 'Unsecured Loan' A loan that is issued and supported only by the borrower's creditworthiness, rather than by a type of collateral. An unsecured loan is one that is obtained without the use of property as collateral for the loan. // revolving debt // the higher your credit limit, the more you are likely to spend. // half of his income to just serve credit card fees and interest charges (no payments towards paying down) debt ... // banks lend irresponsibly bc they know they can get away with it, or somebody else will do it! because there is not regulation. no bank oversight. //&! The Truth about Payday Loans :Young, British and Broke - youtu.be/-yWxTvffbuE //&! Gambling/Betting Shops on Highstreet.
retail  banking  investment  banking  CDO  CDS  subprime  credit  card  debt  credit  card  financial  literacy  household  debt  mortgage  market  Payday  Loans  exploitation  debt  servitude  student  loan  debt  Bubble  property  ethics  moral  beliefs  revolving  debt  consumer  debt  debtoverhang  debt  Super  Cycle  student  debt  private  debt  status  symbol  instant  gratification  status  anxiety  socioeconomic  status  zombie  consumer  consumerist  consumerism  Protection  overdraft  materialism  crony  capitalism  capitalism  NPL  NINJA  Wall  Street  profit  maximisation  shareholder  value  bonuses  bonus  financial  incentive  incentive  creditrating  credit  creditrisk  credit  score  self-regulation  Bank  Oversight  financial  instruments  derivatives 
january 2016 by asterisk2a
Ben Bernanke urges punishment of individual bankers - BBC News
>> Privatisation where and when it is needed. No, only if it suits their ideology and agenda. // regulatory failure. - youtu.be/Yx1P5Wz2iX4 - Ben Bernanke, John Mack Reflect on 2008 Financial Crisis >> NINJA Loan, homeownership, subprime, ... //&! Ben Bernanke on Lehman Crisis: "We Agreed to Be Vague" (Oct. 6, 2015) | Charlie Rose - youtu.be/EYGbtxzIkvw - 'lehman brothers was a sink hole. money put in from gov in a saving attempt would have resulted in being pulled out by its counterparties and creditors. and had not enough collateral and assets.'
too  big  to  jail  regulators  morality  Justice  System  injustice  Law  &  Justice  white-collar  crime  corporate  scandal  accounting  scandal  mis-selling  CDO  CDS  Interestrateswap  benbernanke  book  TBTF  too  big  to  bail  GFC  trickle-down  economics  economic  history  Super  Rich  1%  bank  bailout  banking  crisis  investment  banking  bank  crisis  retail  banking  CEO  pay  CEO  Abacus  subprime  car  loan  NINJA  fairness  Generationengerechtigkeit  austerity  budget  deficit  Student  Bubble  Wall  Street  profit  maximisation  shareholder  value  free  market  Privatisation  MervynKing  George  Osborne  David  Cameron  self-regulation  regulation  deregulation  Career  Politicians  No  Representation  revolving  door  inequality  Gini  coefficient  income  distribution  oligarchy  democracy  social  contract  political  theory  timgeithner  UK  USA  ideology  dogma  lehmanbrothers 
october 2015 by asterisk2a
Volkswagen Congress Hearing: Emissions scandal - watch live - YouTube
VW USA subsidiary CEO Michael Horn. // 'VW the people's car.' 36:40 - I had no understanding what a defeat device is & that it could be installed to cheat emission tests. [<< Symptom of being a conglomerate! Corporate Culture & Values.] min 38:09 - Is hardware, software & even has to do something with the fuel tank. In some models (gen 2) its just software & a sensor. // 49:20 - framing of the answer with EPA (influenced?), cars on the road right now, even they are not passing emissions test, "are legal & safe to drive for the owners." // min 57 NOx, air pollution. 'compensation will be part of discussion'. 40 times than allowable limit. // 1:11:00 - according to him, @ the current state of investigations, this was out of the engine-drivetrain-engineering/software/emissions department within VW. Was not a corporate executive decision from the top. [My 2 cents: more likely decision was made within those departments due to pressure from top to make the test pass happen. << 1:51:00]
VW  Volkswagen  conglomerate  corporate  culture  corporate  values  air  pollution  libor  rigging  scandal  banking  crisis  investment  banking  self-regulation  regulation  regulators  accountability  Wall  Street  shareholder  value  profit  maximisation  retail  banking  PPI  mis-selling  scandal  bank  crisis  CDO  CDS  pharmaceutical  industry  pharma  big  pharma  corruption  bribery  Petroleum  automotive  autoindustry  carbonemission  carbonfootprint  emissions  white-collar  crime  Justice  System  Law  &  Justice  corporate  state  corporate  media  Positioning  Meat  Egg  Dairy  food  industry  lobbyist  lobby  Lobbying  revolving  door  conflict  of  interest  fiduciary  responsibility  exploitation  mainstreet.org  ethics  ethical  machine  democracy  Career  Politicians  No  Representation  double  standard  Abgas-Affäre  Interestrateswap  corporate  social  responsibility  corporate  scandal  Chemical  Fashion  deception  PR  spin  doctor  monopsony  oligopol  madoff  Enron  Worldcom  BP  accounting  accounting  scandal  tax  evasion  tax  avoidance  crony  capitalism  TBTF  too  big  to  jail  too  big  to  bail  Ego  arrogance  Monsanto  Protection  Act  patent  troll  intellectual  property  willful  ignorance  willful  negligence  DeepwaterHorizon  tax  code  consumer  fraud  Protection 
october 2015 by asterisk2a
UK mortgage market, Barclays Qatar probe and US bank CEOs by FT Banking Weekly
there will be no push for new homes to flood the market, increasing prices support status quo, Loan to value measures (underwater or not?). house prices outpaced income since GFC. Buy-to-Let amplifies boom-bust. bank system resilient enough for 35% fall of prices. // generationengerechtigkeit - more of disposable income to spend on rent! putting money into pockets of rentier (buy-to-let) who can him or herself buy only so many pairs of jeans.
UK  mortgage  market  2015  NPL  underwater  CDS  securitisation  retail  banking  investment  banking  CDO  Taper  BOE  ZIRP  NIRP  QE  property  bubble  Buy-to-Let  Help  to  Buy  Scheme  self-regulation  regulation  regulators  Right  to  Buy  generation  rent  Supply  and  Demand  Demand  and  Supply  distortion  GFC  recovery  leverage  macroprudential  policy  microeconomic  policy  constituency  Tories  Conservative  Party  Generationengerechtigkeit  rent-seeking  rentier 
october 2015 by asterisk2a
New US subprime boom - but this time it is for cars - BBC News
- zero hedge had chart w student loan bubble standing at 1trn, and some, as of about mid 2015, with car loans about to reach 1trn, and credit card debt. just google 'zero hedge car loan' - Blackstone says car loans are now in "untested" territory - bit.ly/1TO6Gxb - "The takeaway here is simple: under pressure to keep the US auto sales miracle alive and feed Wall Street's securitization machine (which is itself driven by demand from yield-starved investors) along the way, lenders are lowering their underwriting standards and extending loans to underqualified borrowers. [...] This cannot and will not end well." // July - With the US consumer hunkering down in 2015 and barely spending more than in the comparble period last year, the only silver lining had been auto sales driven almost entirely by access to cheap credit; - bit.ly/1QBIWc5
credit  bubble  car  loan  subprime  USA  credit  card  credit  card  debt  private  debt  household  debt  debt  servitude  debtoverhang  consumer  debt  student  loan  debt  student  loan  student  debt  Richard  Koo  zombie  consumer  status  symbol  status  anxiety  consumerist  consumerism  materialism  financial  market  financial  crisis  financial  engineering  ABS  CDS  excess  reserves  underinvestment  productive  investment  recovery  UK  western  world  ZIRP  NIRP  QE  revolving  credit  bank  bailout  bank  crisis  banking  crisis  investment  banking  retail  banking  London  2015  GFC 
september 2015 by asterisk2a
The Real Looting of Baltimore... - YouTube
- same with mortgages linked to forex/different currency than your country of residence. // // abuse of existing instruments, not using it for intended purpose // and mis-selling of instruments and products - also see PPI ( Payment Protection Insurance ) mis-selling - http://www.bbc.co.uk/news/business-30695720 // and mis-selling forex linked loans (ie to Swiss Franc) to local governemnts and cities called Interest Rate Swap Mis-selling that got exorbinant expensive following the GFC actions (NIRP) by Central Banks (black swan) // all driven by managers meeting targets, getting and wanting bigger bonuses, wanting the bosses job, ... etc driven by cottage industry of analysts 'forecasting' that profit has to rise X% etc etc. // add also For Profit Schools! in the USA targeting Veterans & other rather financially illiterate :: youtu.be/P8pjd1QEA0c // biggest debt kind - mortgage and student loan debt // financial literacy also include gambling & lottery
Baltimore  Ferguson  mortgage  market  subprime  predatory  lending  practices  ninja  mortgage  UK  USA  Capitalism  crony  profit  maximisation  shareholder  value  foreign  currency  mortgage  bailout  corruption  abuse  of  power  CDS  MBS  lobbyist  lobby  Lobbying  revolving  door  Washington  GFC  toobigtofail  too  big  to  jail  TBTF  Gini  coefficient  financial  literacy  plutocracy  income  inequality  inequality  social  mobility  income  mobility  Western  World  Thomas  Piketty  economic  history  democracy  social  cohesion  libor  rigging  scandal  PPI  scandal  bonuses  bonus  Wall  Street  Payment  Protection  Insurance  mis-selling  Interest  Rate  Swap  banking  investment  banking  banking  crisis  American  Dream  Payday  Loans  debt  bubble  Super  Cycle  student  loan  debt  StudentLoans  lottery  gambling  downward  mobility 
may 2015 by asterisk2a
Verdacht von CDS-Absprachen: EU verschärft Ermittlungen gegen Banken - SPIEGEL ONLINE
Die EU-Kommission droht zahlreichen internationalen Großbanken mit empfindlichen Geldstrafen. Sie wirft unter anderem der Deutschen Bank verbotene Absprachen bei Geschäften für Kreditausfallversicherungen vor. >> /watch?v=u84NhfiGJ7o "Banks in the dock over CDS"
value  at  risk  OTC  trust  cartel  CDS  Corruption  accounting  jpmorgan  confidence  GoldmanSachs  transparency  deutschebank  trustagent  VAR  banking  crisis  too  big  to  jail  Barclays  toobigtofail  bank  crisis 
july 2013 by asterisk2a
US-Klage gegen S&P: Details der Klageschrift - SPIEGEL ONLINE
Der Analyst scheint ziemlich baff. "Dieser Deal ist lächerlich", schreibt er einer Kollegin in einer E-Mail. "Wir sollten ihm kein Rating geben." Die Kollegin sieht das ähnlich - wenn auch nur bedingt: "Das Modell erfasst nicht mal die Hälfte des Risikos", stimmt sie zu. Aber: "Wir geben jedem Deal ein Rating… Er könnte von Kühen strukturiert werden, wir würden ihm ein Rating geben." Der saloppe Wortwechsel stammt vom April 2007, dem Beginn der US-Kreditkrise. Besagter "Deal" war ein besonders wackliges Hypothekenpapier - und die Analysten, die sich darüber lustig machen, arbeiten für Standard & Poor's (S&P), eine der drei großen Rating-Agenturen Amerikas. ist ein regelrechter Finanzkrimi: Gnadenlos enthüllt er, wie Insider lange vor anderen wussten, dass der Crash kommen würde - und trotzdem fleißig weiterzockten, um abzukassieren.
2008  GFC  creditrating  CDS  accountability  creditcrunch  WallStreet  creditrisk  corruption  subprime  CDO  ratingagencies  insider-trading 
february 2013 by asterisk2a
When Japan Goes Japanese: Presenting The Terminal Keynesian Endgame In 14 Charts | ZeroHedge
Why are JGB yields so low

(1) The real interest rate is generally approximated by the real potential growth rate over the long term. It has fallen sharply in the past two decades due to rapid ageing of the population. In turn, firms have lost some of their capex incentive and thus shifted from cash shortfalls to cash surpluses.
(2) Inflation expectations have fallen in Japan because nominal wage cuts in the late 1990s have led to widespread deflation expectations.
(3) So far the JGB market has not factored in a fiscal premium to a significant extent. This is very different from the sovereign Credit Default Swap (CDS) market, where pricing is largely determined by foreign investors. Japan’s sovereign CDS spread, which can be seen as an objective assessment of the government’s solvency, has been rising since the late 2000s. We believe the JGB market’s lack of a fiscal premium is due to the stable domestic uptake of JGBs.

Bond Bubble & End of Keynesianism around ~2018.
bond  bubble  Keynesianism  BOJ  deleveraging  richardkoo  balance  sheet  recession  debtoverhang  sovereign  debt  crisis  CDS  JGB  lostdecade  Japan 
august 2012 by asterisk2a
Investmentbanker: Was der Libor-Skandal bei Barclays verändert hat - SPIEGEL ONLINE
Der Schock des Libor-Skandals trifft das Finanzzentrum London besonders hart. Dort hatte die Politik den Bankern immer besonders lange Leine gelassen, weil das Land außer der Finanz- nun mal nicht mehr viel andere Industrie hat. Dass dieses Vertrauen so missbraucht wurde ...

Der "Tobacco Moment" der Finanzindustrie

Jede weitere Enthüllung wird die Reste des Vertrauens in die Banker zerstören - und den Regulierungswillen der Politiker stärken. Der britische "Economist" spricht angesichts der Ausmaße des Skandals von einem "Tobacco Moment" für die Finanzindustrie - einer Situation, in der sich die gesellschaftliche Stimmung gegen eine Branche wendet und diese Branche mit harten Sanktionen belegt wird, wie einst bei der Zigarettenindustrie.

Investmentbanken

[...] "Die Eigenkapitalrendite kann gut auf eine einstellige Prozentzahl sinken."
- and thus the bonuses and base salary will shrink

***

LIBOR might be the last straw that breaks the neck of "banking"
culture  ethics  toobigtofail  CDS  derivatives  VolckerRule  proptrading  greatrecession  EBA  WallStreet  financialtransactiontax  financialtransactionfee  Europe  BaFin  deutschebank  investment  banking  UK  Politics  transparency  oversight  regulation  regulators  NYFed  BBA  FSA  BOE  LIBOR  rigging  scandal  accountability  confidence  banking  banking  crisis  GFC  bank  crisis  trustagent  trust 
july 2012 by asterisk2a
Greece’s default: The wait is over | The Economist
The biggest sovereign-debt restructuring in history allowed Greece to wipe some €100 billion ($130 billion) from its debts of around €350 billion. It will also be the first test of the resilience of the financial system to the payment on sovereign bonds of credit-default swaps (CDSs), a form of insurance against bad debts.

The threat of coercion might explain why big holders like banks and pension funds chose not to contest the terms of the swap. But Greece needed to achieve close to 100% participation in the bond-swap to unlock its second bail-out package from international lenders. That meant it had to force the small group of malcontents to swallow the deal, which in turn meant it could no longer be seen as voluntary. That triggered a “credit event” and started a process that will lead to a payout of CDS insurance on Greek bonds later this month.
ECB  restructuring  sovereign  debt  crisis  2012  haircut  Greece  ISDA  CDS 
march 2012 by asterisk2a
ISDA's Take On Lack Of Greek CDS Trigger: "We Think The Credit Event/DC Process Is Fair, Transparent And Well-Tested" | ZeroHedge
Everyone's favorite banker-controlled CDS determining organization took offense to media reports saying it may be secretive, corrupt, and borderline manipulate if not worse. To wit: "In sum, we think the credit event/DC process is fair, transparent and well-tested. There’s simply no evidence to the contrary. Perhaps after today this non-secret secret will be a secret no more."

ISDA's petulant take in its entirety as follows:
...
2012  CDS  Greece  ISDA 
march 2012 by asterisk2a
media.bloomberg.com/bb/avfile/News/Surveillance/vpQ4E8uJTp2g.mp3
Peterson’s Kirkegaard ‘Surprised’ No Default Declared (Audio)

Mar 1, 2012

Jacob Kirkegaard, research fellow at the Peterson Institute for International Economics, says there should have been a "default declaration" that triggered credit defaults swap payouts. Kirkegaard talks with Bloomberg's Ken Prewitt and Tom Keene on Bloomberg Radio's "Bloomberg Surveillance."

Greeks, people, politicians - not able to reform Greece.

Monti / Italy has technical government currently in place - will see if this gets better for Italy

ISDA declared new bailout from Feb/March and its agreed haircuts and new bonds for old bonds is not a default.

Portugal likely to get 2nd bailout - bridge to 2013.

ECB is already FDIC, stupid. With LTRO / non standard monetary policy measures.

True, any default will hurt EU tax payers. Bailouts and haircuts already did.
CDS  2012  bailout  ISDA  accountability  transparency  mariomonti  politics  PIIGS  Europe  Greece  governance 
march 2012 by asterisk2a
The mathematical equation that caused the banks to crash | Science | The Observer
The Black-Scholes equation has its roots in mathematical physics, where quantities are infinitely divisible, time flows continuously and variables change smoothly. Such models may not be appropriate to the world of finance. Traditional mathematical economics doesn't always match reality, either, and when it fails, it fails badly. Physicists, mathematicians and economists are therefore looking for better models.

At the forefront of these efforts is complexity science, a new branch of mathematics that models the market as a collection of individuals interacting according to specified rules. These models reveal the damaging effects of the herd instinct: market traders copy other market traders. Virtually every financial crisis in the last century has been pushed over the edge by the herd instinct. It makes everything go belly-up at the same time. If engineers took that attitude, and one bridge in the world fell down, so would all the others.
herding  sociology  irrational  complexity  CDS  blackswan  economic  history  creditcrunch  greatrecession  GFC  derivatives  mathematics  Economics  Black-Scholes  Equation 
february 2012 by asterisk2a
Capturing the ECB - Joseph E. Stiglitz - Project Syndicate
Moreover, “innovation” in financial markets has made it possible for securities owners to be insured, meaning that they have a seat at the table, but no “skin in the game.” They do have interests: they want to collect on their insurance, and that means that the restructuring must be a “credit event” – tantamount to a default. The ECB’s insistence on “voluntary” restructuring – that is, avoidance of a credit event – has placed the two sides at loggerheads. The irony is that the regulators have allowed the creation of this dysfunctional system.

.... involuntary restructuring vs voluntary restructuring

The ECB’s behavior should not be surprising: as we have seen elsewhere, institutions that are not democratically accountable tend to be captured by special interests. That was true before 2008; unfortunately for Europe – and for the global economy – the problem has not been adequately addressed since then.
lobby  accountability  democracy  politics  Europe  contagion  credit  event  ISDA  CDS  restructuring  regulation  banking  transparency  2012  default  Greece  ECB 
february 2012 by asterisk2a
media.bloomberg.com/bb/avfile/News/Surveillance/v2zpEry96Vno.mp3
Bloomberg’s Harper Says Bank Exposure to Europe Clouded (Audio)
Nov 16, 2011
Bloomberg reporter Christine Harper says U.S. bank investors are being kept in the dark about exposure to European sovereign default. Harper talks with Bloomberg's Ken Prewitt and Tom Keene on Bloomberg Radio's "Bloomberg Surveillance."

- ISDA - the body for CDS / Derivatives decided that greece 50% PSI (haircut) is not default,
- bc ISDA is owned by banks, if they would rule it as default scenario - everyone would have owed somebody something - which would have introduced great uncertainty, volatility, share price losses
- did it in their own interest.
= this equals to collusion in an oligopolistic market.

http://www.bloomberg.com/news/2011-11-16/jpmorgan-joins-goldman-keeping-investors-in-dark-on-italy-derivatives-risk.html
ISDA  CDS  derivatives  collusion  oligopol  financialmarket  Greece  default  2011  OTC  exposure  sovereign  debt  crisis  PIIGS  accounting  fraud  transparency  confidence 
november 2011 by asterisk2a
JPMorgan Joins Goldman Keeping Italy Debt Risk in Dark - Bloomberg
tied together w bungee cords

JPMorgan Chase & Co. (JPM) and Goldman Sachs Group Inc. (GS), among the world’s biggest traders of credit derivatives, disclosed to shareholders that they have sold protection on more than $5 trillion of debt globally.

JPMorgan said in its third-quarter SEC filing that more than 98 percent of the credit-default swaps the New York-based bank has written on PIIGS debt is balanced by CDS contracts purchased on the same bonds.

By contrast, Goldman Sachs discloses only what it calls “funded” exposure to PIIGS debt -- $4.16 billion before hedges and $2.46 billion after, as of Sept. 30. Those amounts exclude commitments or contingent payments, such as credit-default swaps, said Lucas van Praag, a spokesman for the bank.

“Their position is you don’t need to know the risks, which is why they’re giving you net numbers,” said Nomi Prins, “Net is only as good as the counterparties on each side of the net -- that’s why it’s misleading in a fluid, dynamic market.”
jpmorgan  goldmansachs  sovereign  debt  exposure  derivatives  2011  PIIGS  CDS  toobigtofail  counterpartyrisk  citigroup  bankofamerica  boa  morganstanley  USA  Europe  lehmanbrothers  crisis  analysis  financialmarket  default  liquidity  solvency  confidence  trust 
november 2011 by asterisk2a
Credit-Default Swap Risk Bomb Is Wired to Explode: Mark Buchanan - Bloomberg
The European nations are linked in a network of debts, as Bill Marsh recently illustrated in the New York Times with a beautiful piece of graphic art. Greece and Italy are prominent; Ireland, Portugal and Spain lurk ominously nearby. France and Germany seem exposed, too, as does the U.S.
The image is like a complex wiring diagram for a ticking debt bomb. Yet what it shows may be less important than what it leaves out: a largely invisible network of ties among institutions around the world, which could ultimately cause global financial chaos.
This hidden network has been created by institutions that buy and sell unregulated credit-default swaps. These are essentially insurance contracts on bonds; in the event of a default on the bond, the seller of the swap promises to pay the buyer the bond’s value.

The researchers showed that too much risk sharing can make it easy for distress to spread like a virus.
CDS  Europe  bomb  debt  bubble  2011  OTC  sovereign  crisis  unknown  toobigtofail  2008  AIG  risk  system  systemicrisk  problems  exposure  Greece  PIIGS  tippingpoint  history  lesson  economics  Financalmeltdown  FinancialCrisisInquiryCommission  financialmarket  financialmarkets  financialcrisis  finance 
november 2011 by asterisk2a
ISDA Text: Ultimate Decision on CDS Credit Events by Comte | ForexLive
Based on what we know now, it appears from news reports that the
Eurozone proposal involves a voluntary exchange that would not be
binding on all holders. As such, it does not appear to be likely that
the Eurozone proposal will trigger payments under existing CDS
contracts. However, whether or not it does so will be decided by the DC
on the basis of the specific facts, if a request is made to them.
Greece  haircut  EFSF  bailout  2011  CDS  contract 
october 2011 by asterisk2a
Debt and Redemption (Marije Meerman, VPRO Backlight 2010) - YouTube
Debt and Redemption (Marije Meerman, VPRO Backlight 2010) - Mar 25, 2011

All over Europe, governments dressed up their accounts by buying exotic financial products from major investment banks. Then came the crash.
Debt and Redemption shows how local authorities in Italy are struggling with the disastrous aftermath of their deals. The city of Milan has decided to strike back by charging four banks with fraud. The banks, as a matter of course, deny any wrongdoing.
Marije Meerman visits Milan and the village Polino Italy and travels to the US, where she speaks to writer/journalist Matt Taibbi (Rolling Stone, Griftopia), investor/blogger Reggie Middleton (Boombustblog) and former IMF economist Simon Johnson (13 Bankers: The Wall Street Takeover and the Next Financial Meltdown).
JosephCassano  AIG  Interestrateswap  CDS  derivatives  MattTaibbi  Italy  subprime  complexity  wallstreet  Milan  goldmansachs  Greece  fraud  PIIGS  europe  ECB  history  oligopol  oligarchy  sovereign  debt  crisis  IMF  monopoly  ReggieMiddleton  speculation 
july 2011 by asterisk2a
Crisis Contest: European Nations vs American States The Reformed Broker
The Economist gives us a fun-filled chart of how our states' credit default swaps match up against those of various European nations. It seems that California bonds are now more expensive to insure than Italian debt, though deemed as less risky than Spanish debt.

Remember, with CDS spreads, it's like golf- the lower the number the better. Also, these swap prices were as of Tuesday I believe, so if anything, the Spanish stuff probably even wider today.
municipal  bonds  bond  CDS  2010  PIIGS  ireland  greece  spain  USA  sovereign  debt 
november 2010 by asterisk2a
Numerous European Banks And Re/Insurers Identified With Tens Of Billions In Greek Failed Repo Exposure | zero hedge
BNP, Commerzbank, HSBC, SocGen, Natixis, BNP, CA, AXA, ING and Rabobank all identified as banks with massive Greek repo exposure. The next question: will writedowns on these now illiquid and, as the Greek bond market is effectively shut down for a second day running, untradeable positions be taken, or will Europe follow the US in pretending tens of billions in valuation gaps will be filled by Hopium?

The Commerzbank 3.1 billion in repo to a large Greek bank
CDS  greece  europe  bailout  germany  may  2010 
may 2010 by asterisk2a
Michael Lewis’s ‘The Big Short’? Read the Harvard Thesis Instead! - Deal Journal - WSJ
She emailed scores of Harvard alumni. One pointed her toward LehmanLive, a comprehensive database on CDOs. She received scores of other data leads. She began putting together charts and visuals, holding off on analysis until she began to see patterns–how Merrill Lynch and Citigroup were the top originators, how collateral became heavily concentrated in subprime mortgages and other CDOs, how the credit ratings procedures were flawed, etc.
CDO  economics  finance  research  recession  crisis  michaellewis  CDS  lehmanbrothers  merrylllynch  thesis 
march 2010 by asterisk2a
Embrace reality, not fight speculation | Analysis & Opinion | Reuters
This is not an issue that will end with the euro zone. What derivative speculators on Greek debt are doing is little different at its heart than investors selling U.S. Treasuries or British gilts because they feel those countries’ deficit situations are getting out of hand. These are simply bond market vigilantes in another form.
CDS  greece  derivatives  speculation  comment  opinion  sovereign  debt 
march 2010 by asterisk2a
European Central Bank Chief Economist: 'Everyone Is a Sinner at the Moment' - SPIEGEL ONLINE - News - International
The country has no other choice. Part 3: Greece 'Must and Will Make It'

SPIEGEL: How do you feel, for example, about the idea of all countries issuing a joint euro bond?

Graphic: Euro-dollar exchange rate
Zoom
DER SPIEGEL

Graphic: Euro-dollar exchange rate
Stark: It was already discussed a while ago. But it would not solve the structural problems of countries like Greece at all. Besides, it would require some euro countries to take responsibility for the debts of others. Interest rates would rise in the euro countries that have managed their economies effectively and would fall in the other countries.
europe  euro  europe-flu  debt  greece  PIIGS  EMU  greatrecession  recession  contagion  ECB  comment  opinion  2010  outlook  CDS  public  government  austerity  society  unrest  eurobond 
february 2010 by asterisk2a
Albert Edwards: At 500% Net Liabilities To GDP, It Is Too Late To Prevent The Collapse Of The G-7; Greece Is Irrelevant, We Are All Now Insolvent | zero hedge
I am persuaded though by Richard Koo's book about the lessons from Japan's balance sheet recession. The crux of his analysis is that governments have no option but to stimulate aggressively all the while the private sector is de-leveraging. ANY attempt at fiscal cuts simply results in renewed recession and a further loss of confidence, thus making it even harder and more costly to sustain any subsequent recovery - and hence the budget deficit ends up bigger than before (e.g. see chart below). This is exactly the outcome I expect.
greece  PIIGS  debt  economy  europe  CDS  deflation  euro  EMU  crisis  2010  dubai  Keynesianism  keynes  society  unrest  unrecht  economics  battle-for-the-world-economy  battle-of-ideas  battleforideas  japan  history  lesson  balancesheet  recession  greatrecession 
february 2010 by asterisk2a
Obama's Big Sellout : Rolling Stone
Then he got elected.

What's taken place in the year since Obama won the presidency has turned out to be one of the most dramatic political about-faces in our history. Elected in the midst of a crushing economic crisis brought on by a decade of orgiastic deregulation and unchecked greed, Obama had a clear mandate to rein in Wall Street and remake the entire structure of the American economy. What he did instead was ship even his most marginally progressive campaign advisers off to various bureaucratic Siberias, while packing the key economic positions in his White House with the very people who caused the crisis in the first place. This new team of bubble-fattened ex-bankers and laissez-faire intellectuals then proceeded to sell us all out, instituting a massive, trickle-up bailout and systematically gutting regulatory reform from the inside.
BobRubin  bailout  corruption  barackobama  presidency  government  usa  politics  economy  JosephStiglitz  AIG  bonuses  citigroup  campaign  TARP  history  lobby  wallstreet  lobbyist  Lobbying  larrysummers  timgeithner  goldmansachs  RahmEmanuel  barofsky  CDS  derivatives  regulation  reform  barneyfrank  LTCM  SEC  CFTC  ConsumerFinanceProtectionAgency  CFPA  coruption  FDIC  treasury 
february 2010 by asterisk2a
A.I.G. Insurance Unit Alico Dabbled in Credit-Default Swaps - NYTimes.com
Ever since the American International Group nearly collapsed, the conventional wisdom has been that the exotic derivatives that drove it to the brink were the product of a lone, unregulated subsidiary in London. The Federal Reserve chairman, Ben S. Bernanke, called the London branch “a hedge fund, basically, attached to a large and stable insurance company.”
But the suggestion that A.I.G.’s core insurance business did not dabble in derivatives is not quite true. One of its biggest insurance units, incorporated in Delaware, was also dealing in the derivatives known as credit-default swaps, according to regulatory filings with the state.

Though the Delaware division had a much smaller portfolio of those swaps than the London unit, and its portfolio did not pose a similar risk to the world financial system, the very presence of the swaps in a regulated insurance company points to a weakness in insurance oversight.
AIG  CDS  regulation  reform 
february 2010 by asterisk2a
It is Japan we should be worrying about, not America - Telegraph
Simon Johnson, former chief economist of the International Monetary Fund (IMF), told the US Congress last week that the debt path was out of control and raised "a real risk that Japan could end up in a major default".

The IMF expects Japan's gross public debt to reach 218pc of gross domestic product (GDP) this year, 227pc next year, and 246pc by 2014. This has been manageable so far only because Japanese savers have been willing or coerced into lending for almost nothing. The yield on 10-year government bonds has been around 1.30pc this year, though they jumped to 1.42pc last week.
japan  CDS  economy  depression  crisis  finance  recession  failure  fiscal  financial  government  debt 
november 2009 by asterisk2a
Old Banks, New Lending Tricks - BusinessWeek
That didn't take long. The economy hasn't yet recovered from the implosion of risky investments that led to the worst recession in decades—and already some of the world's biggest banks are peddling a new generation of dicey products to corporations, consumers, and investors.
.
CDS-Linked Corporate Credit Lines
CDS  creditcrunch  creditline  banking  regulation  oversight  supervision  financial  innovation 
august 2009 by asterisk2a
Brooksley Born, the Cassandra of the Derivatives Crisis - washingtonpost.com
A little more than a decade ago, Born foresaw a financial cataclysm, accurately predicting that exotic investments known as over-the-counter derivatives could play a crucial role in a crisis much like the one now convulsing America. Her efforts to stop that from happening ran afoul of some of the most influential men in Washington, men with names like Greenspan and Levitt and Rubin and Summers -- the same Larry Summers who is now a key economic adviser to President Obama.

She was the head of a tiny government agency who wanted to regulate the derivatives. They were the men who stopped her.
BobRubin  derivatives  creditcrunch  alangreenspan  larrysummers  CDS 
august 2009 by asterisk2a

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