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It wasn't risky lending, it was the credit default swaps that caused the crash.
The tax plan includes significant individual income tax system reforms, including the doubling of the standard tax deduction and the elimination of most itemized deductions, except those for mortgage interest and charitable contributions. Given the increased standard deduction ($12,000 for single and $24,000 for married taxpayers), many more taxpayers will forgo itemizing and take the standard deduction. Based on an analysis of an earlier House Republican tax reform plan, the Tax Policy Center estimated that 84% of current itemizers would take the standard deduction if it were doubled. Even more taxpayers will take the standard deduction under the recent Trump proposal due to the elimination of state and local tax itemized deduction.
Even though mortgage interest deduction remains, it will no longer have value for current itemizers who would take the standard deduction under the Trump plan. Only the few taxpayers who would still itemize will receive any income tax savings from mortgage interest, however, those tax savings will likely be substantially smaller than under existing tax rules. The elimination of mortgage-related tax savings for most homeowners, and reduction for others, compounded with the loss of tax savings from deducting property taxes means the after-tax cost of home ownership will increase. A taxpayer in the 25% tax bracket with $11,000 in mortgage interest and $5,000 in real estate taxes would receive tax savings from these itemized deductions of $4,000, or $333 per month, under the current law. The elimination of the home-ownership tax subsidies means that the after-tax cost of home ownership will increase.
The tax reform proposal’s reduction to homeowner tax subsidies could lead to more people deciding to rent homes because it may be a lower-cost alternative to purchasing. Although the proposal lacks specifics, it does not appear to reduce the tax subsidies afforded to owners of residential rental real estate. Rental property owners may continue to deduct interest paid to finance the purchase of rental properties and can deduct state and local property taxes. These items are not considered itemized deductions; instead, they are deductions in computing net rental income. The disallowance of the state and local tax deduction under the Trump plan only applies to an individual taxpayer’s itemized deductions. Given rental property owners will still receive the federal tax savings from both property mortgage interest and real estate taxes, the Republican proposal creates a stark difference in the tax subsidies between owner-occupied homes and rental properties.
Additionally, unlike homeowners, rental property owners receive tax savings through the deductibility of maintenance costs and depreciation. The rental property owner may also avoid tax upon the sale of the property if it is exchanged for another property. The Trump proposals may also further benefit rental property owners through the reduced tax rate of 25% on partnerships and other pass-through entities commonly used in the real estate industry. Although the owners are the ones who actually receive the tax savings from the various allowed deductions, the tenants likely benefit, albeit indirectly, through lower rental rates. In a competitive market, the rent charged to the tenant should be lower due to the tax benefits afforded the rental property owners.
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It wasn't risky lending, it was the credit default swaps that caused the crash.
Well banks will still make risky loans as long as they know the government will bail them out.
The far left bailed out the banks and wall street and not the people that were affected.
It wasn't risky lending, it was the credit default swaps that caused the crash.
It wasn't risky lending, it was the credit default swaps that caused the crash.
Caused no, exacerbated yes.
Here's a hint: they're used to insure against loan default and they only pay off if the insured debt defaults or significant credit event on the part of the debtor occurs, thus if Banker Joe only makes loans that are at a low risk of default then he doesn't need to pay CDS premiums to insure them against default, on the other hand if Banker Joe makes risky, too stupid to succeed loans he probably wants to buy insurance against default (so he can move the risk off his books and free up reserves to make more stupid ass risky loans) and that's where CDS comes into play and then of course you have secondary markets for CDS contracts which is where opaque CDS risk chains come into the picture (A buys a CDS contract from B who then sells it to C who then sells it to D, if D can't pay off then everybody up the chain takes it in the rear) .
So, CDS weren't the root cause of "the crash" (it was risky lending and even riskier derivatives bets) but opaque CDS chains and piss poor risk management up and down the food chain did exacerbate it... just ask the stupid CDS loving dickweeds at AIG.
_________________________________It wasn't risky lending, it was the credit default swaps that caused the crash.
How does a credit default swap do that?
Walk thru the steps for me.
Unfortunately you're mistaken, CDS Contracts were regularly sold off so the underwriters could move risk off their books, they're financial assets after all and thus they're "tradeable", in fact it was common for speculators to buy both the underlying debt and the CDS contract for the debt if they reasoned that the debt was likely to default (so they could get the risk premiums on discounted debt) as well as the inverse case where speculators buying high premium CDS contracts and the underlying risky debt that they reasoned wouldn't default (same reason as the inverse case). Along with the above you also had a proliferation of naked CDS positions which is essentially just another synthetic derivative bet by speculators on assets they didn't own thus magnifying the negative effects of credit disruptions if the bets went bad.It wasn't risky lending, it was the credit default swaps that caused the crash.
Caused no, exacerbated yes.
Here's a hint: they're used to insure against loan default and they only pay off if the insured debt defaults or significant credit event on the part of the debtor occurs, thus if Banker Joe only makes loans that are at a low risk of default then he doesn't need to pay CDS premiums to insure them against default, on the other hand if Banker Joe makes risky, too stupid to succeed loans he probably wants to buy insurance against default (so he can move the risk off his books and free up reserves to make more stupid ass risky loans) and that's where CDS comes into play and then of course you have secondary markets for CDS contracts which is where opaque CDS risk chains come into the picture (A buys a CDS contract from B who then sells it to C who then sells it to D, if D can't pay off then everybody up the chain takes it in the rear) .
So, CDS weren't the root cause of "the crash" (it was risky lending and even riskier derivatives bets) but opaque CDS chains and piss poor risk management up and down the food chain did exacerbate it... just ask the stupid CDS loving dickweeds at AIG.
and then of course you have secondary markets for CDS contracts which is where opaque CDS risk chains come into the picture (A buys a CDS contract from B who then sells it to C who then sells it to D, if D can't pay off then everybody up the chain takes it in the rear) .
Pretty sure they didn't work that way in 2007-2008.
All swaps were between the 2 parties. A couldn't sell the contract he signed with B to C, A would have to write a new contract with C.....no netting.
Unfortunately you're mistaken, CDS Contracts were regularly sold off so the underwriters could move risk off their books, they're financial assets after all and thus they're "tradeable", in fact it was common for speculators to buy both the underlying debt and the CDS contract for the debt if they reasoned that the debt was likely to default (so they could get the risk premiums on discounted debt) as well as the inverse case where speculators buying high premium CDS contracts and the underlying risky debt that they reasoned wouldn't default (same reason as the inverse case). Along with the above you also had a proliferation of naked CDS positions which is essentially just another synthetic derivative bet by speculators on assets they didn't own thus magnifying the negative effects of credit disruptions if the bets went bad.It wasn't risky lending, it was the credit default swaps that caused the crash.
Caused no, exacerbated yes.
Here's a hint: they're used to insure against loan default and they only pay off if the insured debt defaults or significant credit event on the part of the debtor occurs, thus if Banker Joe only makes loans that are at a low risk of default then he doesn't need to pay CDS premiums to insure them against default, on the other hand if Banker Joe makes risky, too stupid to succeed loans he probably wants to buy insurance against default (so he can move the risk off his books and free up reserves to make more stupid ass risky loans) and that's where CDS comes into play and then of course you have secondary markets for CDS contracts which is where opaque CDS risk chains come into the picture (A buys a CDS contract from B who then sells it to C who then sells it to D, if D can't pay off then everybody up the chain takes it in the rear) .
So, CDS weren't the root cause of "the crash" (it was risky lending and even riskier derivatives bets) but opaque CDS chains and piss poor risk management up and down the food chain did exacerbate it... just ask the stupid CDS loving dickweeds at AIG.
and then of course you have secondary markets for CDS contracts which is where opaque CDS risk chains come into the picture (A buys a CDS contract from B who then sells it to C who then sells it to D, if D can't pay off then everybody up the chain takes it in the rear) .
Pretty sure they didn't work that way in 2007-2008.
All swaps were between the 2 parties. A couldn't sell the contract he signed with B to C, A would have to write a new contract with C.....no netting.
The bigger problem however wasn't the buying and selling of contracts (since that is a two party risk transfer), it was the situation you described where the original underwriter insures the CDS risk (with a new contract) to a third party and then that third party does the same thing with a fourth party and so on, this creates an opaque risk chain; its difficult to calculate actual risk because it's hard to determine who all the parties in the chain are let alone which ones are the "weak link(s)"; there is a cascading effect if any of the parties involved are unable to pay off in the event that the original debt defaults.
Unfortunately you're mistaken, CDS Contracts were regularly sold off so the underwriters could move risk off their books, they're financial assets after all and thus they're "tradeable", in fact it was common for speculators to buy both the underlying debt and the CDS contract for the debt if they reasoned that the debt was likely to default (so they could get the risk premiums on discounted debt) as well as the inverse case where speculators buying high premium CDS contracts and the underlying risky debt that they reasoned wouldn't default (same reason as the inverse case). Along with the above you also had a proliferation of naked CDS positions which is essentially just another synthetic derivative bet by speculators on assets they didn't own thus magnifying the negative effects of credit disruptions if the bets went bad.It wasn't risky lending, it was the credit default swaps that caused the crash.
Caused no, exacerbated yes.
Here's a hint: they're used to insure against loan default and they only pay off if the insured debt defaults or significant credit event on the part of the debtor occurs, thus if Banker Joe only makes loans that are at a low risk of default then he doesn't need to pay CDS premiums to insure them against default, on the other hand if Banker Joe makes risky, too stupid to succeed loans he probably wants to buy insurance against default (so he can move the risk off his books and free up reserves to make more stupid ass risky loans) and that's where CDS comes into play and then of course you have secondary markets for CDS contracts which is where opaque CDS risk chains come into the picture (A buys a CDS contract from B who then sells it to C who then sells it to D, if D can't pay off then everybody up the chain takes it in the rear) .
So, CDS weren't the root cause of "the crash" (it was risky lending and even riskier derivatives bets) but opaque CDS chains and piss poor risk management up and down the food chain did exacerbate it... just ask the stupid CDS loving dickweeds at AIG.
and then of course you have secondary markets for CDS contracts which is where opaque CDS risk chains come into the picture (A buys a CDS contract from B who then sells it to C who then sells it to D, if D can't pay off then everybody up the chain takes it in the rear) .
Pretty sure they didn't work that way in 2007-2008.
All swaps were between the 2 parties. A couldn't sell the contract he signed with B to C, A would have to write a new contract with C.....no netting.
The bigger problem however wasn't the buying and selling of contracts (since that is a two party risk transfer), it was the situation you described where the original underwriter insures the CDS risk (with a new contract) to a third party and then that third party does the same thing with a fourth party and so on, this creates an opaque risk chain; its difficult to calculate actual risk because it's hard to determine who all the parties in the chain are let alone which ones are the "weak link(s)"; there is a cascading effect if any of the parties involved are unable to pay off in the event that the original debt defaults.
Unfortunately you're mistaken, CDS Contracts were regularly sold off so the underwriters could move risk off their books, they're financial assets after all and thus they're "tradeable",
No. They're contracts between 2 parties. Not standardized, not nettable and not tradeable.
Unfortunately you're mistaken, CDS Contracts were regularly sold off so the underwriters could move risk off their books, they're financial assets after all and thus they're "tradeable", in fact it was common for speculators to buy both the underlying debt and the CDS contract for the debt if they reasoned that the debt was likely to default (so they could get the risk premiums on discounted debt) as well as the inverse case where speculators buying high premium CDS contracts and the underlying risky debt that they reasoned wouldn't default (same reason as the inverse case). Along with the above you also had a proliferation of naked CDS positions which is essentially just another synthetic derivative bet by speculators on assets they didn't own thus magnifying the negative effects of credit disruptions if the bets went bad.It wasn't risky lending, it was the credit default swaps that caused the crash.
Caused no, exacerbated yes.
Here's a hint: they're used to insure against loan default and they only pay off if the insured debt defaults or significant credit event on the part of the debtor occurs, thus if Banker Joe only makes loans that are at a low risk of default then he doesn't need to pay CDS premiums to insure them against default, on the other hand if Banker Joe makes risky, too stupid to succeed loans he probably wants to buy insurance against default (so he can move the risk off his books and free up reserves to make more stupid ass risky loans) and that's where CDS comes into play and then of course you have secondary markets for CDS contracts which is where opaque CDS risk chains come into the picture (A buys a CDS contract from B who then sells it to C who then sells it to D, if D can't pay off then everybody up the chain takes it in the rear) .
So, CDS weren't the root cause of "the crash" (it was risky lending and even riskier derivatives bets) but opaque CDS chains and piss poor risk management up and down the food chain did exacerbate it... just ask the stupid CDS loving dickweeds at AIG.
and then of course you have secondary markets for CDS contracts which is where opaque CDS risk chains come into the picture (A buys a CDS contract from B who then sells it to C who then sells it to D, if D can't pay off then everybody up the chain takes it in the rear) .
Pretty sure they didn't work that way in 2007-2008.
All swaps were between the 2 parties. A couldn't sell the contract he signed with B to C, A would have to write a new contract with C.....no netting.
The bigger problem however wasn't the buying and selling of contracts (since that is a two party risk transfer), it was the situation you described where the original underwriter insures the CDS risk (with a new contract) to a third party and then that third party does the same thing with a fourth party and so on, this creates an opaque risk chain; its difficult to calculate actual risk because it's hard to determine who all the parties in the chain are let alone which ones are the "weak link(s)"; there is a cascading effect if any of the parties involved are unable to pay off in the event that the original debt defaults.
Unfortunately you're mistaken, CDS Contracts were regularly sold off so the underwriters could move risk off their books, they're financial assets after all and thus they're "tradeable",
No. They're contracts between 2 parties. Not standardized, not nettable and not tradeable.
You need to do more homework because you're wrong, CDS are credit derivatives and were and are still bought and sold (traded), just like a myriad of other types of derivative contracts.
It wasn't risky lending, it was the credit default swaps that caused the crash.
Caused no, exacerbated yes.
Here's a hint: they're used to insure against loan default and they only pay off if the insured debt defaults or significant credit event on the part of the debtor occurs, thus if Banker Joe only makes loans that are at a low risk of default then he doesn't need to pay CDS premiums to insure them against default, on the other hand if Banker Joe makes risky, too stupid to succeed loans he probably wants to buy insurance against default (so he can move the risk off his books and free up reserves to make more stupid ass risky loans) and that's where CDS comes into play and then of course you have secondary markets for CDS contracts which is where opaque CDS risk chains come into the picture (A buys a CDS contract from B who then sells it to C who then sells it to D, if D can't pay off then everybody up the chain takes it in the rear) .
So, CDS weren't the root cause of "the crash" (it was risky lending and even riskier derivatives bets) but opaque CDS chains and piss poor risk management up and down the food chain did exacerbate it... just ask the stupid CDS loving dickweeds at AIG.
Why not? it's a contract, just like a mortgage is a contract, the obligations and benefits on either go to the holder of the contract.Unfortunately you're mistaken, CDS Contracts were regularly sold off so the underwriters could move risk off their books, they're financial assets after all and thus they're "tradeable", in fact it was common for speculators to buy both the underlying debt and the CDS contract for the debt if they reasoned that the debt was likely to default (so they could get the risk premiums on discounted debt) as well as the inverse case where speculators buying high premium CDS contracts and the underlying risky debt that they reasoned wouldn't default (same reason as the inverse case). Along with the above you also had a proliferation of naked CDS positions which is essentially just another synthetic derivative bet by speculators on assets they didn't own thus magnifying the negative effects of credit disruptions if the bets went bad.Caused no, exacerbated yes.
Here's a hint: they're used to insure against loan default and they only pay off if the insured debt defaults or significant credit event on the part of the debtor occurs, thus if Banker Joe only makes loans that are at a low risk of default then he doesn't need to pay CDS premiums to insure them against default, on the other hand if Banker Joe makes risky, too stupid to succeed loans he probably wants to buy insurance against default (so he can move the risk off his books and free up reserves to make more stupid ass risky loans) and that's where CDS comes into play and then of course you have secondary markets for CDS contracts which is where opaque CDS risk chains come into the picture (A buys a CDS contract from B who then sells it to C who then sells it to D, if D can't pay off then everybody up the chain takes it in the rear) .
So, CDS weren't the root cause of "the crash" (it was risky lending and even riskier derivatives bets) but opaque CDS chains and piss poor risk management up and down the food chain did exacerbate it... just ask the stupid CDS loving dickweeds at AIG.
and then of course you have secondary markets for CDS contracts which is where opaque CDS risk chains come into the picture (A buys a CDS contract from B who then sells it to C who then sells it to D, if D can't pay off then everybody up the chain takes it in the rear) .
Pretty sure they didn't work that way in 2007-2008.
All swaps were between the 2 parties. A couldn't sell the contract he signed with B to C, A would have to write a new contract with C.....no netting.
The bigger problem however wasn't the buying and selling of contracts (since that is a two party risk transfer), it was the situation you described where the original underwriter insures the CDS risk (with a new contract) to a third party and then that third party does the same thing with a fourth party and so on, this creates an opaque risk chain; its difficult to calculate actual risk because it's hard to determine who all the parties in the chain are let alone which ones are the "weak link(s)"; there is a cascading effect if any of the parties involved are unable to pay off in the event that the original debt defaults.
Unfortunately you're mistaken, CDS Contracts were regularly sold off so the underwriters could move risk off their books, they're financial assets after all and thus they're "tradeable",
No. They're contracts between 2 parties. Not standardized, not nettable and not tradeable.
You need to do more homework because you're wrong, CDS are credit derivatives and were and are still bought and sold (traded), just like a myriad of other types of derivative contracts.
You need to do more homework because you're wrong, CDS are credit derivatives and were and are still bought and sold (traded),
If Goldman wrote a CDS contract with Merrill, Merrill could not liquidate the position by selling it to Morgan.
Yeah and? what makes you think that risk is calculated by counting the number of contracts one has on one's books?If Merrill wrote an offsetting contract with Morgan, Merrill would have 2 contracts on the books, not zero contracts.
I'm not but it appears that you are since you're the one that's claiming that CDS aren't tradeable, which leads one to conclude that you think that trades only occur on public exchanges.just like a myriad of other types of derivative contracts
Don't confuse these contracts with exchange traded options and futures.
Right back where we started from.
You are supposed to learn from your mistakes.