Thursday, October 16, 2008


This is an extension of discussions
from the yahoo finance Suncor message base,
hopefully with the spam removed
and the censorship evaded.

My first posting is a message which Yahoo systematically blocked from publication
(and you thought that that only happens in China!?!?!?!)

(This is from rhjl -- I'm just playing secretary here.)

(Oh, excuse me -- that's a dirty word -- administrative assistant ...)

"I'm thinking that the SEC really needs to grow a pair and declare Credit Default Swaps based upon directional trading illegal. Now.

They have the damn power, and they are corrupt beyond hanging for not doing it. The varieties I describe hereafter are "securities", pure and simple, and not allowed to be traded in unregulated markets. SEC Act 1934. We are being bullshitted into oblivion.

I heard some of a senate hearing yesterday, of all committees, the Senate agriculture committee, chaired by Harkin, I think, because of the devastating impact this is having on agriculture. ( I think I heard a bushel of corn now costs $5 and sells for $3.50-don't quote me). Anyway, the testimony indicated that 90% or so of credit default swaps were "directional", meaning, I gathered, that they were ersatz 'shorts" or "longs", not true insurance plays on real defaults.

I admit I didn't get all of this. If anybody has better info, straighten me out.

The fact that these hearings occurred is confirmed by Bloomberg's report of the CDS Association's reaction, but, of course, not the point of it. That never gets aired, unless you have nothing to do but catch Cspan broadcasts.

Anyway, putting this interpretation together with Cramer's views from last night, which I posted, I see that the "shadow market" is really the regulated market we watch with horror all day, and can't fathom. The "real market" is out of sight, and drives all this madness.

The real bets are placed out of sight, in "dark pools" which our gubment tolerates, while they skin us to the bone.

"Iowa Politics" seems to have heard of this, but not all the real gory details.

These guys picked up comments about naked credit default swaps. Ye Gads. seqNum=5

I think another part of the bill I would craft would require the seizure of the assets of all companies that wrote directional CDSs in the last year.

What a stinking, out of control, ungodly mess this is.

Cramer was right-this is nothing more than taking out "insurance" on your neighbors house, and burning it down."

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