Derivatives caused the crisis

Discussion in 'Economy' started by Chris, Oct 10, 2008.

  1. Chris
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    Chris Gold Member

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    McCain's Economic Adviser is ex-Texas Sen. Phil Gramm. On Dec. 15, 2000, hours before Congress was to leave for Christmas recess, Gramm had a 262-page amendment slipped into the appropriations bill. It forbade federal agencies to regulate the financial derivatives that greased the skids for passing along risky mortgage-backed securities to investors. And that, my friends, is why everything's falling apart. That is why the taxpayers are now on the hook for the follies of Fannie Mae, Freddie Mac, Bear Stearns and now the insurance giant AIG to the tune of $700 billion.
     
  2. CrimsonWhite
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    CrimsonWhite *****istrator Emeritus Supporting Member

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    Link?
     
  3. Truthmatters
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    Hmmm Ill have to look into this.

    wouldnt put it past him .

    He was all over the Enron mess too , his wife was on the board of Enron during it too.
     
  4. AllieBaba
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    I love the smell of desperation.
     
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    Telll me what you know about Phil Gramm and Enron?
     
  7. Truthmatters
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    You see that bill that the SEC blamed was called Gramm Leach Bilely, do you know why it was called that?
     
  8. dilloduck
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    dilloduck Diamond Member

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    It was a catchy phrase some ad firm came up with ??? :lol:
     
  9. Chris
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    Chris Gold Member

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    Warren Buffett, the billionaire investor and long-time chairman of Berkshire Hathaway Inc. (BRK.A), is a man who speaks his mind. I'm not sure whether he's always been that way, or whether it is his exceptional wealth or his age -- or both -- that emboldens him to cut through Wall Street B.S. like a hot knife and expose the bloody truth about the foibles of modern finance.

    Whatever the case, his comments on derivatives, in particular, have been always been especially enlightening -- and entertaining -- because they expose this supposed risk-sharing panacea for the house of cards it has become. In Derivatives Cause 'Mass Destruction', the Wall Street Journal reports on the 'Oracle of Omaha's' latest thoughts on the subject.

    Earlier Saturday, Mr. Buffet repeated his warning on the dangers of derivatives, saying that excessive borrowing by traders, investors and corporations will eventually lead to significant dislocation in the financial markets.

    In fielding a question about derivatives, which he once referred to as "financial weapons of mass destruction," Mr. Buffett told shareholders that he expects derivatives and borrowing, or leverage, would inevitably end in huge losses for many financial participants.

    "The introduction of derivatives has totally made any regulation of margin requirements a joke," said Mr. Buffett, referring to the U.S. government's rules limiting the amount of borrowed money an investor can apply to each trade. "I believe we may not know where exactly the danger begins and at what point it becomes a super danger. We don't know when it will end precisely, but...at some point some very unpleasant things will happen in markets."

    Buffett On Derivatives: 'A Fool's Game' - Seeking Alpha
     
  10. Truthmatters
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    Phil Gramm is an evil bastard.
     

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