Wall Street's "SHADOW MARKET", what the heck is it?

Care4all

Warrior Princess
Mar 24, 2007
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HOW, the normal human being with a very full life, have the time to learn about all of the unregulating gambling that goes on behind the scenes of the Stock Market and Wall Street in general is beyond me????

shadow market?

WHY THE HECK is there a SHADOW market behind the stock market and the every day joe that was told to invest their 401k's in the stock market were not schooled on the "Shadow Market" of the stock market, and how it doesn't mean crap on all the studies you did on who you invested with because someone else is betting against you, or insuring against you in the darkness of a Shadow?

I wouldn't blame anyone from ever investing in the Stock Market again! And we only had about 10% of our total worth invested in left over from a previous job 401k in the stock market, but people that had more in their 401k's and were close to retirement, JUST GOT THE WIND KICKED OUT OF THEM, moreso, they are on life support, trying to survive and now see themselves working till 80 in order to eat and put a roof over their heads.

Why hasn't the press gone in depth over this issue...this 'shadow market' and how it really had a big affect on what happened in this overall market crisis....because they don't want to scare us EVEN MORE....?

Sure they touch on it occasionally, but have they covered all the angles and all the faces involved and really gotten down to what it takes to make us thoroughly understand it?

I don't think so...

Please tell me, those in the know, what is the Shadow Market of Wall Street?

care
 
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HOW, the normal human being with a very full life, have the time to learn about all of the unregulating gambling that goes on behind the scenes of the Stock Market and Wall Street in general is beyond me????

shadow market?

WHY THE HECK is there a SHADOW market behind the stock market and the every day joe that was told to invest their 401k's in the stock market were not schooled on the "Shadow Market" of the stock market, and how it doesn't mean crap on all the studies you did on who you invested with because someone else is betting against you, or insuring against you in the darkness of a Shadow?

I wouldn't blame anyone from ever investing in the Stock Market again! And we only had about 10% of our total worth invested in left over from a previous job 401k in the stock market, but people that had more in their 401k's and were close to retirement, JUST GOT THE WIND KICKED OUT OF THEM, moreso, they are on life support, trying to survive and now see themselves working till 80 in order to eat and put a roof over their heads.

Why hasn't the press gone in depth over this issue...this 'shadow market' and how it really had a big affect on what happened in this overall market crisis....because they don't want to scare us EVEN MORE....?

Sure they touch on it occasionally, but have they covered all the angles and all the faces involved and really gotten down to what it takes to make us thoroughly understand it?

I don't think so...

Please tell me, those in the know, what is the Shadow Market of Wall Street?

care

Don't invest and you don't have to worry about it. Take care of your own money
 
HOW, the normal human being with a very full life, have the time to learn about all of the unregulating gambling that goes on behind the scenes of the Stock Market and Wall Street in general is beyond me????

shadow market?

WHY THE HECK is there a SHADOW market behind the stock market and the every day joe that was told to invest their 401k's in the stock market were not schooled on the "Shadow Market" of the stock market, and how it doesn't mean crap on all the studies you did on who you invested with because someone else is betting against you, or insuring against you in the darkness of a Shadow?

I wouldn't blame anyone from ever investing in the Stock Market again! And we only had about 10% of our total worth invested in left over from a previous job 401k in the stock market, but people that had more in their 401k's and were close to retirement, JUST GOT THE WIND KICKED OUT OF THEM, moreso, they are on life support, trying to survive and now see themselves working till 80 in order to eat and put a roof over their heads.

Why hasn't the press gone in depth over this issue...this 'shadow market' and how it really had a big affect on what happened in this overall market crisis....because they don't want to scare us EVEN MORE....?

Sure they touch on it occasionally, but have they covered all the angles and all the faces involved and really gotten down to what it takes to make us thoroughly understand it?

I don't think so...

Please tell me, those in the know, what is the Shadow Market of Wall Street?

care

Don't invest and you don't have to worry about it. Take care of your own money

After years and years and years of the drumbeat INVEST FOR YOUR RETIREMENT, COLLEGE FOR YOUR KIDS, FOR YOUR FUTURE HEALTHC ARE COSTS..

NOW let the buyer beware?

My, that's a convenient copout.

Once again we see somebody rushing to blame the victims of what is basically a gigantic FRAUD.

What actually motivates you to think that way, Dill?

Seriously, I don't get it.
 
HOW, the normal human being with a very full life, have the time to learn about all of the unregulating gambling that goes on behind the scenes of the Stock Market and Wall Street in general is beyond me????

shadow market?

WHY THE HECK is there a SHADOW market behind the stock market and the every day joe that was told to invest their 401k's in the stock market were not schooled on the "Shadow Market" of the stock market, and how it doesn't mean crap on all the studies you did on who you invested with because someone else is betting against you, or insuring against you in the darkness of a Shadow?

I wouldn't blame anyone from ever investing in the Stock Market again! And we only had about 10% of our total worth invested in left over from a previous job 401k in the stock market, but people that had more in their 401k's and were close to retirement, JUST GOT THE WIND KICKED OUT OF THEM, moreso, they are on life support, trying to survive and now see themselves working till 80 in order to eat and put a roof over their heads.

Why hasn't the press gone in depth over this issue...this 'shadow market' and how it really had a big affect on what happened in this overall market crisis....because they don't want to scare us EVEN MORE....?

Sure they touch on it occasionally, but have they covered all the angles and all the faces involved and really gotten down to what it takes to make us thoroughly understand it?

I don't think so...

Please tell me, those in the know, what is the Shadow Market of Wall Street?

care

Don't invest and you don't have to worry about it. Take care of your own money

After years and years and years of the drumbeat INVEST FOR YOUR RETIREMENT, COLLEGE FOR YOUR KIDS, FOR YOUR FUTURE HEALTHC ARE COSTS..

NOW let the buyer beware?

My, that's a convenient copout.

Once again we see somebody rushing to blame the victims of what is basically a gigantic FRAUD.

What actually motivates you to think that way, Dill?

Seriously, I don't get it.

Copout my ass---I never encouraged ANYONE to save, invest or spend.
 
Don't invest and you don't have to worry about it. Take care of your own money

After years and years and years of the drumbeat INVEST FOR YOUR RETIREMENT, COLLEGE FOR YOUR KIDS, FOR YOUR FUTURE HEALTHC ARE COSTS..

NOW let the buyer beware?

My, that's a convenient copout.

Once again we see somebody rushing to blame the victims of what is basically a gigantic FRAUD.

What actually motivates you to think that way, Dill?

Seriously, I don't get it.

Copout my ass---I never encouraged ANYONE to save, invest or spend.

You?

Of course not.

I'm talking about our society in general, Dill.

Are you telling me that we weren't told to invest in the market and that only fools keep their money in a saving account?
 
HOW, the normal human being with a very full life, have the time to learn about all of the unregulating gambling that goes on behind the scenes of the Stock Market and Wall Street in general is beyond me????

shadow market?

WHY THE HECK is there a SHADOW market behind the stock market and the every day joe that was told to invest their 401k's in the stock market were not schooled on the "Shadow Market" of the stock market, and how it doesn't mean crap on all the studies you did on who you invested with because someone else is betting against you, or insuring against you in the darkness of a Shadow?

I wouldn't blame anyone from ever investing in the Stock Market again! And we only had about 10% of our total worth invested in left over from a previous job 401k in the stock market, but people that had more in their 401k's and were close to retirement, JUST GOT THE WIND KICKED OUT OF THEM, moreso, they are on life support, trying to survive and now see themselves working till 80 in order to eat and put a roof over their heads.

Why hasn't the press gone in depth over this issue...this 'shadow market' and how it really had a big affect on what happened in this overall market crisis....because they don't want to scare us EVEN MORE....?

Sure they touch on it occasionally, but have they covered all the angles and all the faces involved and really gotten down to what it takes to make us thoroughly understand it?

I don't think so...

Please tell me, those in the know, what is the Shadow Market of Wall Street?

care

There is no shadow market on Wall Street. Most people didn't know about debt backed securities because, with only a few exceptions, they were sold only in large blocks to wealthy investors such as pension funds or hedge funds, etc. Everyone in the financial industry and everyone in government knew about them or should have known about them because the sales of these debt backed securities had been financing our economic growth for many years, and Geithner has said that reviving the market for these securities is essential to rebuilding our financial system.

In fact, TALF is intended to encourage investors to buy new issues of debt backed securities and it is a key element in the Obama-Geithner plan to rescue our financial system. Geithner says we shouldn't worry about these new issues of debt backed securities because they are all AAA rated, but of course, the old ones, now often referred to as toxic assets, were also AAA rated when issued.
 
After years and years and years of the drumbeat INVEST FOR YOUR RETIREMENT, COLLEGE FOR YOUR KIDS, FOR YOUR FUTURE HEALTHC ARE COSTS..

NOW let the buyer beware?

My, that's a convenient copout.

Once again we see somebody rushing to blame the victims of what is basically a gigantic FRAUD.

What actually motivates you to think that way, Dill?

Seriously, I don't get it.

Copout my ass---I never encouraged ANYONE to save, invest or spend.

You?

Of course not.

I'm talking about our society in general, Dill.

Are you telling me that we weren't told to invest in the market and that only fools keep their money in a saving account?

I'm telling you that you are responsible for your own assets. Doing what "society" tells us to do has lead to some of the most idiotic trends in civilization. Anyone who believes in security is a fool.
 
Copout my ass---I never encouraged ANYONE to save, invest or spend.

You?

Of course not.

I'm talking about our society in general, Dill.

Are you telling me that we weren't told to invest in the market and that only fools keep their money in a saving account?

I'm telling you that you are responsible for your own assets. Doing what "society" tells us to do has lead to some of the most idiotic trends in civilization. Anyone who believes in security is a fool.

Did you think that way 25 years ago when they took your defined pension away and offered you the 401k instead...did you really distrust all the charts they came with to "sell you" on 401k's and your investment in the stock market or wall street? Where they gave you no ohter options to get the 5% match of your employer, OTHER THAN investing in the 401k retirement in the stock market?

Well, looking back on it Dillo, in HINDSITE, you give good advice...I'll give you that....

And in hindsite, 401k's and the creation of such was the biggest Gift Horse that ever existed, to Wall Street, to the Stock Market....taking our money and yes, forcing us to take risks with it in the market or not get the company match at all for our retirement....

all this money going in to the market AFTER the 401k came in to existence, pulling all of middle America in to it....not just the wealthiest, as it once was...but the every day joe investing in it....whew! that was a major taking....

as with this crisis now for those of us with 401k's...and yes, those of us who foolishly believed all those charts they gave us that told us how we would be millionaires by the time we retired, if we began investing X percentage in our 401k's now, with 45 years ahead of investing in it....and with the company match....and that this would be BETTER than the defined pension retirement plan that we once had...

yeah, we were fools to believe the scam artists alright...

Care
 
HOW, the normal human being with a very full life, have the time to learn about all of the unregulating gambling that goes on behind the scenes of the Stock Market and Wall Street in general is beyond me????

shadow market?

WHY THE HECK is there a SHADOW market behind the stock market and the every day joe that was told to invest their 401k's in the stock market were not schooled on the "Shadow Market" of the stock market, and how it doesn't mean crap on all the studies you did on who you invested with because someone else is betting against you, or insuring against you in the darkness of a Shadow?

I wouldn't blame anyone from ever investing in the Stock Market again! And we only had about 10% of our total worth invested in left over from a previous job 401k in the stock market, but people that had more in their 401k's and were close to retirement, JUST GOT THE WIND KICKED OUT OF THEM, moreso, they are on life support, trying to survive and now see themselves working till 80 in order to eat and put a roof over their heads.

Why hasn't the press gone in depth over this issue...this 'shadow market' and how it really had a big affect on what happened in this overall market crisis....because they don't want to scare us EVEN MORE....?

Sure they touch on it occasionally, but have they covered all the angles and all the faces involved and really gotten down to what it takes to make us thoroughly understand it?

I don't think so...

Please tell me, those in the know, what is the Shadow Market of Wall Street?

care

There is no shadow market on Wall Street. Most people didn't know about debt backed securities because, with only a few exceptions, they were sold only in large blocks to wealthy investors such as pension funds or hedge funds, etc. Everyone in the financial industry and everyone in government knew about them or should have known about them because the sales of these debt backed securities had been financing our economic growth for many years, and Geithner has said that reviving the market for these securities is essential to rebuilding our financial system.

In fact, TALF is intended to encourage investors to buy new issues of debt backed securities and it is a key element in the Obama-Geithner plan to rescue our financial system. Geithner says we shouldn't worry about these new issues of debt backed securities because they are all AAA rated, but of course, the old ones, now often referred to as toxic assets, were also AAA rated when issued.

WHY is it KEY that these securities not see the light of day of what is actually in them which is where our problem with these toxic assets, the MBS's?

Why can't investors know what is put in them, the specifics?

If they knew this when they were buying the MBS with the AAA ratings they would not have invested as much money in the riskier ones or they would have, for the higher interest earned on them but they might have bought less of those and more of securities with less of a risk...

The rating's agencies being paid by the very banks and financial institutions creating them and then selling off these securities and getting more money for them and more buyers for them by rating them AAA.... like fannie and freddie was also a problem, and then fannie and freddie selling them to others as well based on these same ridiculous AAA ratings....

but this is NOT what the Shadow Market is....from what i have heard people say on the financial news, at least not all of it...?

like, what are Crdit default swaps?
Care
 
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The Shadow Financial System are assets and liabilities kept off the books of financial companies and were unregulated.

I suspect that is an urban myth. Do you have specific examples?

Why would you think it was an urban myth?

Structured investment vehicle - Wikipedia, the free encyclopedia

Because it is an urban myth. The link says nothing about keeping assets or liabilities off the books, and the term, shadow banking system, simply means that there are non bank institutions that also perform some functions traditionally associated with banks. In fact, the term, bank, is misleading in this context since investment banks are far less regulated than commercial banks are.

It is important to understand in this current atmosphere of scapegoating and conspiracy theories that the significance of the lack of regulations of non bank financial institutions, which include GMAC, Ford Credit Corp., hedge funds, etc. is not that they did dishonest things that regulations would have prevented, but that since they were not regulated, the government didn't have a good idea of how important to financing our economic growth they were and that is part of the reason the government was taken by surprise by the near collapse of our financial system last year.

Because investment banks and these non bank financial institutions were not regulated as much as commercial banks were, the government didn't get to take as close a look at their books as they did the books of commercial banks, and so it didn't realize how vulnerable the investment banks and non bank financial institutions were to fluctuations in the derivatives markets and how vulnerable our financial system was to their problems.

There is nothing secret or sinister about these non bank financial institutions. In fact the TALF program the government is pushing now is aimed at assisting some of these institutions in selling new issues of debt backed securities as a part of the Obama-Geithner rescue plan for our financial system.
 
You?

Of course not.

I'm talking about our society in general, Dill.

Are you telling me that we weren't told to invest in the market and that only fools keep their money in a saving account?

I'm telling you that you are responsible for your own assets. Doing what "society" tells us to do has lead to some of the most idiotic trends in civilization. Anyone who believes in security is a fool.

Did you think that way 25 years ago when they took your defined pension away and offered you the 401k instead...did you really distrust all the charts they came with to "sell you" on 401k's and your investment in the stock market or wall street? Where they gave you no ohter options to get the 5% match of your employer, OTHER THAN investing in the 401k retirement in the stock market?

Well, looking back on it Dillo, in HINDSITE, you give good advice...I'll give you that....

And in hindsite, 401k's and the creation of such was the biggest Gift Horse that ever existed, to Wall Street, to the Stock Market....taking our money and yes, forcing us to take risks with it in the market or not get the company match at all for our retirement....

all this money going in to the market AFTER the 401k came in to existence, pulling all of middle America in to it....not just the wealthiest, as it once was...but the every day joe investing in it....whew! that was a major taking....

as with this crisis now for those of us with 401k's...and yes, those of us who foolishly believed all those charts they gave us that told us how we would be millionaires by the time we retired, if we began investing X percentage in our 401k's now, with 45 years ahead of investing in it....and with the company match....and that this would be BETTER than the defined pension retirement plan that we once had...

yeah, we were fools to believe the scam artists alright...

Care

Just saying---when you trust anyone else with your stuff you have given away control of it too. Sometimes it can't be helped but it certainly is a truth worth noting don't you think ?
 
HOW, the normal human being with a very full life, have the time to learn about all of the unregulating gambling that goes on behind the scenes of the Stock Market and Wall Street in general is beyond me????

shadow market?

WHY THE HECK is there a SHADOW market behind the stock market and the every day joe that was told to invest their 401k's in the stock market were not schooled on the "Shadow Market" of the stock market, and how it doesn't mean crap on all the studies you did on who you invested with because someone else is betting against you, or insuring against you in the darkness of a Shadow?

I wouldn't blame anyone from ever investing in the Stock Market again! And we only had about 10% of our total worth invested in left over from a previous job 401k in the stock market, but people that had more in their 401k's and were close to retirement, JUST GOT THE WIND KICKED OUT OF THEM, moreso, they are on life support, trying to survive and now see themselves working till 80 in order to eat and put a roof over their heads.

Why hasn't the press gone in depth over this issue...this 'shadow market' and how it really had a big affect on what happened in this overall market crisis....because they don't want to scare us EVEN MORE....?

Sure they touch on it occasionally, but have they covered all the angles and all the faces involved and really gotten down to what it takes to make us thoroughly understand it?

I don't think so...

Please tell me, those in the know, what is the Shadow Market of Wall Street?

care

There is no shadow market on Wall Street. Most people didn't know about debt backed securities because, with only a few exceptions, they were sold only in large blocks to wealthy investors such as pension funds or hedge funds, etc. Everyone in the financial industry and everyone in government knew about them or should have known about them because the sales of these debt backed securities had been financing our economic growth for many years, and Geithner has said that reviving the market for these securities is essential to rebuilding our financial system.

In fact, TALF is intended to encourage investors to buy new issues of debt backed securities and it is a key element in the Obama-Geithner plan to rescue our financial system. Geithner says we shouldn't worry about these new issues of debt backed securities because they are all AAA rated, but of course, the old ones, now often referred to as toxic assets, were also AAA rated when issued.

WHY is it KEY that these securities not see the light of day of what is actually in them which is where our problem with these toxic assets, the MBS's?

Why can't investors know what is put in them, the specifics?

If they knew this when they were buying the MBS with the AAA ratings they would not have invested as much money in the riskier ones or they would have, for the higher interest earned on them but they might have bought less of those and more of securities with less of a risk...

The rating's agencies being paid by the very banks and financial institutions creating them and then selling off these securities and getting more money for them and more buyers for them by rating them AAA.... like fannie and freddie was also a problem, and then fannie and freddie selling them to others as well based on these same ridiculous AAA ratings....

but this is NOT what the Shadow Market is....from what i have heard people say on the financial news, at least not all of it...?

like, what are Crdit default swaps?
Care

A credit default swap is similar to an insurance policy on a portion of the value of a security. AIG sold lots of credit default swaps on debt backed securities and that was what put it in danger of bankruptcy.

These debt backed securities were never intended to be offered to the general public for sale. They were offered to large investors who presumably had expert financial and legal advice that could understand what was being sold. It is mind boggling that multi billion dollar hedge funds and mutual funds and pension plans and so on bought these things without understanding how vulnerable the underlying assets were to slight increases in the Fed's interest rate adjustments.

Clearly the fact that the financial institutions that issued the derivatives paid the rating companies to rate them created a conflict of interests and it is astonishing that no one in business or government was concerned about this until the the crisis exploded last year.
 
Because it is an urban myth. The link says nothing about keeping assets or liabilities off the books, and the term, shadow banking system, simply means that there are non bank institutions that also perform some functions traditionally associated with banks. In fact, the term, bank, is misleading in this context since investment banks are far less regulated than commercial banks are.

I am afraid you are confused. Several banks kept SIVs off balance sheet

http://www.marketwatch.com/news/sto...x?guid={19DFDB79-8217-4B35-BD92-C3C15A74AC8C}

Citi had to bring their SIVs onto the balance sheet.

SIVs and other conduits were structured as off balance sheet entities similar to Enron.

http://www.nytimes.com/2008/02/29/business/29norris.html

It is important to understand in this current atmosphere of scapegoating and conspiracy theories that the significance of the lack of regulations of non bank financial institutions, which include GMAC, Ford Credit Corp., hedge funds, etc. is not that they did dishonest things that regulations would have prevented, but that since they were not regulated, the government didn't have a good idea of how important to financing our economic growth they were and that is part of the reason the government was taken by surprise by the near collapse of our financial system last year.

Because investment banks and these non bank financial institutions were not regulated as much as commercial banks were, the government didn't get to take as close a look at their books as they did the books of commercial banks, and so it didn't realize how vulnerable the investment banks and non bank financial institutions were to fluctuations in the derivatives markets and how vulnerable our financial system was to their problems.

There is nothing secret or sinister about these non bank financial institutions. In fact the TALF program the government is pushing now is aimed at assisting some of these institutions in selling new issues of debt backed securities as a part of the Obama-Geithner rescue plan for our financial system.

I don't disagree with anything that you say here. There was nothing illegal about the shadow banking system.
 
Because it is an urban myth. The link says nothing about keeping assets or liabilities off the books, and the term, shadow banking system, simply means that there are non bank institutions that also perform some functions traditionally associated with banks. In fact, the term, bank, is misleading in this context since investment banks are far less regulated than commercial banks are.

I am afraid you are confused. Several banks kept SIVs off balance sheet

Citi plans to absorb $49 billion in SIV assets onto balance sheet - MarketWatch

Citi had to bring their SIVs onto the balance sheet.

SIVs and other conduits were structured as off balance sheet entities similar to Enron.

http://www.nytimes.com/2008/02/29/business/29norris.html

It is important to understand in this current atmosphere of scapegoating and conspiracy theories that the significance of the lack of regulations of non bank financial institutions, which include GMAC, Ford Credit Corp., hedge funds, etc. is not that they did dishonest things that regulations would have prevented, but that since they were not regulated, the government didn't have a good idea of how important to financing our economic growth they were and that is part of the reason the government was taken by surprise by the near collapse of our financial system last year.

Because investment banks and these non bank financial institutions were not regulated as much as commercial banks were, the government didn't get to take as close a look at their books as they did the books of commercial banks, and so it didn't realize how vulnerable the investment banks and non bank financial institutions were to fluctuations in the derivatives markets and how vulnerable our financial system was to their problems.

There is nothing secret or sinister about these non bank financial institutions. In fact the TALF program the government is pushing now is aimed at assisting some of these institutions in selling new issues of debt backed securities as a part of the Obama-Geithner rescue plan for our financial system.

I don't disagree with anything that you say here. There was nothing illegal about the shadow banking system.

No, you are confused. First of all, the shadow financial system refers to non banks entities such as hedge funds or the financial arms of corporations such as GMAC, not to these kinds of investments by Citi or other banks. The SIV's were on the corporate balance sheets but were not on the banking balance sheets because they had nothing to do with the banking functions of Citi.

When the market for SIV's died and financing for them became hard to obtain, Citi could have sold them at a steep loss for the corporation without effecting the bank's balance sheets at all, but since their long term value was still intact, Citi chose to bring them on to the bank's balance sheets, in effect having the bank provide the financing for them that was no longer available elsewhere, thus increasing the bank's reserve requirements and reducing the money it had to lend to other borrowers. This was done, not because Citi had to do it, but because it was trying to preserve the long term profits for the corporation at the expense of current profits it might have made if the money had been used for other loans.

There is nothing secretive or deceptive or "shadowy" about any of this if you just remember that the corporation and the bank maintain separate balance sheets because they are distinct entities.
 
Why would a bank be required to have a higher reserve for them while a financial institution would not?

Is this an unnecessary rule for banks that SHOULD NOT HAVE BEEN there? And if you say no, it should have been there for the regulated banks because of "so and so reasons" or because of "XYZ" reasons then why would this have not applied to our financial institutions which in some cases, were even larger than the banks themselves?

p.s. please try to put this at a kindergartner's level so i can try to understand it... :)
 

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