derivatives :slashingtongue

ST wishes for the new year

Friday, January 1st, 2010 at 3:24 am  
Leave your comment

10)Health care bill to be passed in a responsible manner. Health care is one of the most important things affecting America. We cannot have a Republican attitude of ignoring this threat, nor can we have the Democrats manner of just getting a bill passed.

9)Terror to me quashed. The recent terrorist miss by the Nigerian tells us that the threat is still there. We must take it by the horns. We must succeed in Afghanistan. Yemen, Somalia, Sudan, Eritrea and especially Pakistan too are other high risk areas to watch out for.

8)Financial reforms to be passed. We experienced a 2009 of recovery. But we must learn from our mistakes or we would have a lot more 2008 than we have to. Lets regulate Credit Default Swaps, short selling and other forms of derivatives. If these do not go unchecked, we can expect to pay a price.

7)Banking reform to be passed. Banking, together with the housing sector was what ultimately crumbled the economy. Casino banking should only happen with the banks’ own money! We cannot allow banks to gamble around with our savings to the point the government have to bail them out to secure our money!

6)Lets get immigration reform. For God’s sake, lets have fortifications along our both our borders! What are we, sub Saharan Africa where we have no money to build a proper fence or a wall? Common! Also lets just throw the illegal immigrants back to Mexico, rather than paying for them to be in jail.

5)Look after our environment! There are many IDIOTS out there that doubt global warming just like they doubt that the Earth is billions of years old and not thousands. Just because we are experiencing a cold snap right now, it does not mean that the temperature is not rising. That does not mean that we should tax on Carbon; we need regulations. We need the trees back and we need regulations that would make emissions lower rather than taxing that.

4)UNITED states of America; not Conservatistan or Liberaland. Please, lets have the Governor Jesse Ventura spirit amongst us. Lets not give a crap about unions or small government. Lets just do what is right!

3)Control our debt!!!! We are having a $11 trillion national debt, a vast majority of it which we accumulated in the last 30 years. We need to get it done. Lets spend where we need to and cut it in cases where we do not. Let the Bush tax cuts expire please, for the sake of our future generations.

2)Lets start manufacturing again. We need to start making things again in America. Else we are going to have a turbulent, jobless future. Lets start with green jobs please! That is the kind of job that would never leave!

1)America resurges again! I am sick and tired of people saying China and India are surging and future big shots. Do you know what? We put them there! I challenge America right now, that we would be the economy that the world turns to.

Related articles by Zemanta
Enhanced by Zemanta

Dubai expose : Lessons still not learned

Saturday, November 28th, 2009 at 6:19 pm  
Leave your comment

$60 billion. That is a drop in the bucket as compared to the $10 trillion we have. Yet the doom of Dubai, seemed to have echoed around that world and got the markets panicking. What we can tell you is that we have not learned our lessons yet and this demonstrates the power house economy that US really is.

$60 billion. That is more than you and I would ever make in our lifetimes. But as a corporation, it really is not that much. Microsoft is worth more than $200 billion, Apple are Google, each, are worth more than $150 billion; so how is it that a city state that owes the world $60 billion could shake the world like it did?

The answer : silly risk taking. What caused creditors to be so afraid was that lots of the debts that we see today would be increased many times over due to the manipulation of risk. Let me give you a very much simplified example.

Lets say Company A had some formula to turn water to Gold. Company A goes to Bank A to get a loan, and Bank A approved a loan of $10 million. Bank B does not believe that Company A’s plan. So it does something called a Credit Default Swap. They would give Bank A the money for the loan. Should Company A default on her payments to Bank A, Bank A would pay Bank B $100 million.

The example that I gave above is what I call a 10:1 (100 million to 10 million) bet scenario. There are other examples in real life with methods ranging from short selling to derivatives which have a 30 : 1 bet ratio. Now that is what the EU terms as casino banking.

The same thing happened with Dubai. Should Dubai not be able to pay her debts off, the amount lost by her creditors would not be $60 billion, but in the trillions. That is what the entire pandemonium and panic is all about.

When are we going to learn our lessons? Why can’t we go back to the tried and tested system of a bank putting in capital should they believe in the business plan that they receive. Why must there be what I call sucker capitalism? When are we going to end such practices? Would the next attack be too late to save America? America and the world must wake up to this problem or we would face lots of problems in the future.

Dubai goes $60 billion in the red, and the world panics. Does anybody realize that the world is not that bothered with the trillions of dollars worth of debt when it came to the debt of countries like US, Japan and the UK? This is because the world, as of today, is still very confident in these economies.

I really hope that Dubai bring back the attention of bad banking, as what the economic crash did. It is essential that we get this back in order…

Related articles by Zemanta
Enhanced by Zemanta