Brace Yourselves For Another Stock Market Dive On Monday

[g5000]

I see some people require repetition to get things through their head...


Credit Default Swap (CDS) - A Major Player in the 2008 Financial Crisis

Before the financial crisis of 2008, there was more money invested in credit default swaps than in other pools. The value of credit default swaps stood at $45 trillion compared to $22 trillion invested in the stock market, $7.1 trillion in mortgages and $4.4 trillion in U.S. Treasury. In mid-2010, the value of outstanding CDS was $26.3 trillion.

 

[Toddsterpatriot]

I see some people require repetition to get things through their head...


Credit Default Swap (CDS) - A Major Player in the 2008 Financial Crisis

Before the financial crisis of 2008, there was more money invested in credit default swaps than in other pools. The value of credit default swaps stood at $45 trillion compared to $22 trillion invested in the stock market, $7.1 trillion in mortgages and $4.4 trillion in U.S. Treasury. In mid-2010, the value of outstanding CDS was $26.3 trillion.

How much did Lehman lose trading CDS?

$400 billion? DURR

Many investment banks were involved, but the biggest casualty was Lehman Brothers investment bank, which owed $600 billion in debt, out of which $400 billion was covered by CDS. The bank’s insurer, American Insurance Group, lacked sufficient funds to clear the debt, and the Federal Reserve of the United States needed to intervene to bail it out.

I'm embarrassed for you. What an idiotic source you posted.

AIG was Lehman's insurer? For $400 billion? Did Lehman know that? Did AIG? LOL!

The value of credit default swaps stood at $45 trillion compared to $22 trillion invested in the stock market, $7.1 trillion in mortgages and $4.4 trillion in U.S. Treasury.

Is your source confusing notional value for market value? Are you?

 

[Lakhota]

 

[P@triot]

The government is responsible for the general welfare, dumbass.

No, they are not, you ignorant imbecile. That states delegated 18 enumerated powers to the federal government. That’s it. That’s all. The federal government is responsible for 18 specific items and no more. And healthcare is not one of them.

Your propaganda would literally give them unlimited power. They could easily make the case that “it is in the general welfare” to execute everyone who tests positive for the coronavirus. Is that “constitutional”? Fuck’n imbecile.

 

[P@triot]

Uh...tank? It’s still higher than it ever was under MaObama!

 

[P@triot]

Trump was all over Obama for golfing during the Ebola scare. Guess what Trump is doing today.

Um, hey imbecile? Ebola is the most deadly disease in the world. It’s also the most contagious.

Coronavirus? Some people don’t even display a single symptom. Some have a minor cold such as a runny nose.

What kind of desperate partisan hack attempts to equate a runny nose to Ebola?

 

[P@triot]

It's a simple fact that without derivatives, the broker-dealers would not have had the means to spread the risk as far and wide as they did.

It’s a simple fact that everything you’ve posted is 100% dead wrong. It was the result of lazy, useless asshole such as yourself not doing their job. They didn’t read the prospectus on each bundled investment. The people who did, made hundreds of millions.

Without derivatives, the massive number of toxic mortgages would have been impossible.

There is nothing funnier than watching you humiliate yourself with words that you don’t understand. You’re making 0 sense. I think what you’re attempting to say (albeit ignorantly) is “Credit Default Swaps”. At least I hope so. Otherwise, you’re even dumber than we thought.

I am absolutely correct that derivatives greatly amplified the losses.

Well since “derivatives” makes 0 sense in this context, it’s safe to say you’re wrong as always, humiliating yourself as usual, and making all of us laugh as is the norm.

 

[P@triot]

Guess you missed the part where it says the government will provide for the general welfare of the nation.

Guess you missed the part where that wasn’t a power. Imbecile.

 

[P@triot]

And, sorry, but there aren't any people I know of who are able to develop a vaccine, distribute it to where it's needed...

Well, I mean, you’re a left-wing imbecile so of course you surround yourself with like-minded, incapable, welfare queens. I wouldn’t expect you to know anyone who could develop vaccines.

 

[g5000]

It's a simple fact that without derivatives, the broker-dealers would not have had the means to spread the risk as far and wide as they did.

It’s a simple fact that everything you’ve posted is 100% dead wrong. It was the result of lazy, useless asshole such as yourself not doing their job. They didn’t read the prospectus on each bundled investment. The people who did, made hundreds of millions.

Without derivatives, the massive number of toxic mortgages would have been impossible.

There is nothing funnier than watching you humiliate yourself with words that you don’t understand. You’re making 0 sense. I think what you’re attempting to say (albeit ignorantly) is “Credit Default Swaps”. At least I hope so. Otherwise, you’re even dumber than we thought.

I am absolutely correct that derivatives greatly amplified the losses.

Well since “derivatives” makes 0 sense in this context, it’s safe to say you’re wrong as always, humiliating yourself as usual, and making all of us laugh as is the norm.

There are many more derivatives other than CDS, retard. So when I say "derivatives", I mean derivatives. CDS is but one subset of derivatives which greatly amplified the bubble and the subsequent crash.

All caught up now?

 

[g5000]

Role of Derivatives in Creating Mortgage Crisis

Forget About Housing, The The Real Cause Of The Crisis Was OTC Derivatives

Why Derivatives Caused Financial Crisis

Derivative Instruments and the Financial Crisis 2007-2008: Role and Responsibility

Derivative Instruments and the Financial Crisis 2007-2008: Role and Responsibility by Joseph Sammut :: SSRN

The Role of Derivatives in the Financial Crisis

The Role of Credit Derivatives in the 2008 Global Financial Crisis

 

[g5000]

Before we got sidetracked by a couple dumbasses, I said this:

What I worry about are derivatives which amplify losses. There could be a hedge fund or bank out there which is overleveraged and on the brink of shocking the entire system.

Like Warren Buffet said, “You only find out who is swimming naked when the tide goes out.”

Turns out I am not the only one with this concern: It’s a ‘Swimming Naked’ Moment: The Financial System Has a Real Test

The investor Warren Buffett once gave a famous warning: “It’s only when the tide goes out that you learn who’s been swimming naked.”

The tide has just gone out again, and clues to who’s been swimming naked have begun to emerge.

<snip>

Leveraged loans, which are private loans to already heavily indebted borrowers, could now emerge as the mortgage-backed securities and collateralized debt obligations of the financial crisis. Just as mortgage and debt securities were packaged, carved up and sold to often unwitting investors before the financial crisis, risky high-interest loans have been similarly packaged over the past decade, mostly by nonbank issuers. Given their high yields, collateralized loan obligations, or C.L.O.s, as they’re known, surged in popularity, and the market for them had grown to an estimated $1.2 trillion by the end of last year.

 

[g5000]

Fears of corporate debt bomb grow as coronavirus outbreak worsens

The mammoth debt bulge includes a significant increase in borrowing by the lowest-quality investment grade firms -- those rated just one level above “junk.” More than $1 trillion in “leveraged loans,” a type of risky bank lending to debt-laden companies, is a second potential flash point.

Watchdogs including the Federal Reserve have warned for years that excessive borrowing by corporations, including some with subpar credit ratings, might eventually blow a hole in the U.S. economy. Now, as Wall Street wrestles with a global epidemic, the debt alarms show how investors are reassessing risks they overlooked during the long economic expansion.

“It is a big concern,” said Ruchir Sharma, chief global strategist for Morgan Stanley. “We’re dealing with the unknown. But given the enormous increase in leverage, the system is fragile and vulnerable.”

 

[Toddsterpatriot]

Role of Derivatives in Creating Mortgage Crisis

Forget About Housing, The The Real Cause Of The Crisis Was OTC Derivatives

Why Derivatives Caused Financial Crisis

Derivative Instruments and the Financial Crisis 2007-2008: Role and Responsibility

Derivative Instruments and the Financial Crisis 2007-2008: Role and Responsibility by Joseph Sammut :: SSRN

The Role of Derivatives in the Financial Crisis

The Role of Credit Derivatives in the 2008 Global Financial Crisis

If you add up the value of every stock on the planet, the entire market capitalization would be about $36 trillion. If you do the same process for bonds, you’d get a market capitalization of roughly $72 trillion.

The notional value of the derivative market is roughly $1.4 QUADRILLION.

https://seekingalpha.com/article/198197-why-derivatives-caused-financial-crisis

Notional value. That's the value of the stuff you're betting on.
Not the amount of the bet.
If I buy a call on 100 shares of IBM with a 120 strike expiring on March 20, 2020, I could pay about $330.
My call "controls" about $11,700 worth of stock.

My risk is $330, but the notional value is $11,700. 35 times higher than my actual risk.

If I place a $10 bet on the Cubs-Pirates home opener, the notional value of my bet is about $4.4 billion ($3.1 billion Cubs + $1.3 billion Pirates)

If I lose, I don't need a loan from Warren Buffett to pay off the winner.
If I make a $10 bet on each team, my total risk is $0, but now my notional bets total $8.8 billion.
Scary!

Screaming about $1.4 quadrillion......

Without understanding what it really means, just makes you look silly.

 

[Rambunctious]

If you are not buying stock today you should be....find a smart broker and buy...there are sure fire deals everywhere....

I hope no one took your advice.

Then you don't understand stocks.....

 

[g5000]

If you are not buying stock today you should be....find a smart broker and buy...there are sure fire deals everywhere....

I hope no one took your advice.

Then you don't understand stocks.....

Says the guy who jeered at me for calling the crash...

 

[Rambunctious]

If you are not buying stock today you should be....find a smart broker and buy...there are sure fire deals everywhere....

I hope no one took your advice.

Then you don't understand stocks.....

Says the guy who jeered at me for calling the crash...

Crashes don't bounce back the next day.....

 

[g5000]

If you are not buying stock today you should be....find a smart broker and buy...there are sure fire deals everywhere....

I hope no one took your advice.

Then you don't understand stocks.....

Says the guy who jeered at me for calling the crash...

Crashes don't bounce back the next day.....

This topic shows I understand stocks all too well.

 

[g5000]

The Dow is at 23,400. That is more than 200 points below the bear market benchmark.

 

[g5000]

The Dow has closed at 23,553. We are officially in a bear market.