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Credit Default Swaps
Tweet Topic Started: Oct 26 2008, 06:30 PM (110 Views)
Bobobinc Oct 26 2008, 06:30 PM Post #1
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Saw this on "60 minutes" last week and they had another segment on it tonight.

Basically, unregulated insurance policies on securities. Investors could effectively place a bet on whether a market security would fail. Banned in the early part of the century, Congress changed the law in 2000 with the blessing of wall street. When the mortgage securities market went belly up, investment houses couldn't pay off these "insurance policies" and they went the same way. A few very rich people got mega rich over a matter of months and wall street and the rest of us got hosed.

I'd like school or someone else to explain to me how this unregulated, free market tactic is a good thing.
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boilergrad01 Oct 26 2008, 06:37 PM Post #2
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Bobobinc
Oct 26 2008, 06:30 PM
Saw this on "60 minutes" last week and they had another segment on it tonight.

Basically, unregulated insurance policies on securities. Investors could effectively place a bet on whether a market security would fail. Banned in the early part of the century, Congress changed the law in 2000 with the blessing of wall street. When the mortgage securities market went belly up, investment houses couldn't pay off these "insurance policies" and they went the same way. A few very rich people got mega rich over a matter of months and wall street and the rest of us got hosed.

I'd like school or someone else to explain to me how this unregulated, free market tactic is a good thing.
BoBob ypu are a builder correct is this a tough year for you. I know a few realtors in NC and the ones in Raleigh have second jobs and the one in Charlotte is hurting. Hope you are somehow making it but have heard Charlotte has taken a beating and Stock Building Supplies based out of Raleigh is about to go under.
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Mr Gray Oct 26 2008, 07:49 PM Post #3
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Bobobinc
Oct 26 2008, 06:30 PM
Saw this on "60 minutes" last week and they had another segment on it tonight.

Basically, unregulated insurance policies on securities. Investors could effectively place a bet on whether a market security would fail. Banned in the early part of the century, Congress changed the law in 2000 with the blessing of wall street. When the mortgage securities market went belly up, investment houses couldn't pay off these "insurance policies" and they went the same way. A few very rich people got mega rich over a matter of months and wall street and the rest of us got hosed.

I'd like school or someone else to explain to me how this unregulated, free market tactic is a good thing.
Bob, who was supplying the insurance policies, who got rich, and how did they get rich if no one was able to pay on the policies?
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The body knows what fighters don't: how to protect itself. A neck can only twist so far. Twist it just a hair more and the body says, "Hey, I'll take it from here because you obviously don't know what you're doing... Lie down now, rest, and we'll talk about this when you regain your senses." It's called the knockout mechanism.
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Bobobinc Oct 26 2008, 08:18 PM Post #4
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aaronk2727
Oct 26 2008, 07:49 PM
Bobobinc
Oct 26 2008, 06:30 PM
Saw this on "60 minutes" last week and they had another segment on it tonight.

Basically, unregulated insurance policies on securities. Investors could effectively place a bet on whether a market security would fail. Banned in the early part of the century, Congress changed the law in 2000 with the blessing of wall street. When the mortgage securities market went belly up, investment houses couldn't pay off these "insurance policies" and they went the same way. A few very rich people got mega rich over a matter of months and wall street and the rest of us got hosed.

I'd like school or someone else to explain to me how this unregulated, free market tactic is a good thing.
Bob, who was supplying the insurance policies, who got rich, and how did they get rich if no one was able to pay on the policies?
AIG, Bear Stearns, Lehman, and others. It's a HUGE market.

A lot of hedge fund managers who saw the sub prime market collapse, among others.

They got rich before the money ran out as I understand it.





This explains it pretty well. Credit default swaps


Just Google it. I had no idea this was going on.
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Bobobinc Nov 6 2008, 07:37 PM Post #5
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Bump for Old School. You obviously have a full plate educating the masses ;) but have you seen this ?
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Old_School Nov 6 2008, 07:50 PM Post #6
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Bobobinc
Nov 6 2008, 07:37 PM
Bump for Old School. You obviously have a full plate educating the masses ;) but have you seen this ?
:P

Yeah, I remember this now. I'll try to answer your question later tonight or this weekend. My initial thoughts, before looking glancing at this article, would be that the free market is currently being blamed for a litany of things when in reality the market hasn't been allowed to properly operate. It's like blaming a clogged drain on some inherent flaw in the design of the pipe rather than on the user who flushes hair and god knows what else down it.
The poster formerly known as mybracketownsyou.
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boilergrad01 Nov 6 2008, 07:59 PM Post #7
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Don't you worry about what I flush down the toilet ok
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boilergrad01 Nov 6 2008, 07:59 PM Post #8
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If i clog it i will just call Joe the Plumber
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dreachon Nov 6 2008, 08:07 PM Post #9
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Bob, are you seriously a builder? Because even though I'm sure you are sick of it, I find the correlation hilarious. (note, definitely not bashing you, just laughing at the coincidence.)
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Bobobinc Nov 6 2008, 08:20 PM Post #10
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Yes Dreach I am and you're the first to ever point that out. ;)

It kinda freaked out my boy when he was about 3. Then he thought it was cool. Now I've got him picking up trash and sweeping houses and it's not so cool anymore.
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HoosierLars Nov 6 2008, 09:24 PM Post #11
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Bobobinc
Nov 6 2008, 08:20 PM
Yes Dreach I am and you're the first to ever point that out. ;)

It kinda freaked out my boy when he was about 3. Then he thought it was cool. Now I've got him picking up trash and sweeping houses and it's not so cool anymore.
:rofl:
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dreachon Nov 6 2008, 09:27 PM Post #12
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Bobobinc
Nov 6 2008, 08:20 PM
Yes Dreach I am and you're the first to ever point that out. ;)

It kinda freaked out my boy when he was about 3. Then he thought it was cool. Now I've got him picking up trash and sweeping houses and it's not so cool anymore.
Haha. Way to turn it into a positive and put the boy to work!
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