# \#OccupyWallStreet **URL:** \ **Category:** The BBQ Pit\ **Created:** [September 19, 2011, 6:27pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851 "2011-09-19T18:27:54Z")\ **Posts on this page:** 20\ **Page:** 109
**Author:** ![Zeriel](https://avatars.discourse-cdn.com/v4/letter/z/58956e/32.png) [@Zeriel](https://boards.straightdope.com/u/Zeriel)\ **Post date:** [November 26, 2011, 9:00pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851/2161 "2011-11-26T21:00:38Z")
> [@Scylla](#): > > It’s too big a net and a blanket your throwing there. > > Even an unsecured CDS has the full faith and credit of the issuer supporting it. A CDS simply means you have a third party covering a bet. That CDS is as good or as bad as the credit of that third party. I disagree, largely because I believe the rules should be the same for everyone. I cannot take out unlimited amounts of debt secured only by my own potential to generate income with that debt–even if I have a rock-solid business plan, my reputation isn’t going to get me seventeen credit cards or a starter loan without some collateral, no matter how good my reputation is. > [@](#): > > Anyway, I’m going to call bullshit on your last sentence. > > “the value of the CDS market was significantly higher than the value of the bonds being gambled on by that market” > > Cite please. Wikipedia: [Another concern is the size of CDS market. Because naked credit default swaps are synthetic, there is no limit to how many can be sold. The gross amount of CDS far exceeds all “real” corporate bonds and loans outstanding. As a result, the risk of default is magnified leading to concerns about systemic risk.](http://en.wikipedia.org/wiki/Credit_default_swap) IMF: [The outstanding gross notional amount of credit derivative contracts continues to far exceed the stock of corporate bonds and loans on which most contracts are written. On a net basis, after accounting for offsetting contracts, credit derivative outstanding notional amounts are much smaller (about 10 percent of the gross amounts). However, the actual credit risk transfer lies somewhere between the net and gross numbers. The net number for a particular reference entity is reflective of the amount of cash (or obligations for physical settlements) required to settle all of the outstanding contracts with a zero percent recovery rate after a credit event. However, such netting ignores contractual differences, such as maturities and differential credit event definitions. In addition, the netting calculation implicitly assumes that all contracts within a counterparty “family” can be legally netted, which may not be the case.](http://www.imf.org/external/pubs/ft/wp/2009/wp09254.pdf) ---
**Author:** ![elucidator](https://avatars.discourse-cdn.com/v4/letter/e/8edcca/32.png) [@elucidator](https://boards.straightdope.com/u/elucidator)\ **Post date:** [November 26, 2011, 9:10pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851/2162 "2011-11-26T21:10:59Z")
> [@Scylla](#): > > …If you wish to insist that demand for loans was up in 2008-2009 than you need to provide a fucking cite that shows that… Boy, I sure would! Especially if I ever said any such thing. You said that the loan applications were down, and attributed that to your preferred thesis. Someone else pointed out that if one has little expectation of succeeding, one is much less likely to go through the process, which ain’t that much fun. IIRC, you pointed out that such an argument was simply too stupid for you to seriously consider, then therefore, once again, you win. ---
**Author:** ![Scylla](https://avatars.discourse-cdn.com/v4/letter/s/a5b964/32.png) [@Scylla](https://boards.straightdope.com/u/Scylla)\ **Post date:** [November 26, 2011, 9:53pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851/2163 "2011-11-26T21:53:19Z")
Z: I appreciate the balanced cite. The latter one seems to indicate that your initial assessment was incorrect. I also have an issue with the way we are measuring things. If I sell you a CDS for 10K of a US treasury for 1 penny, the notional value of that contract is 10K. The actual value is only a penny. I would agree that the CDS market has been abused. Just as, in the past, markets for life insurance have been abused. To me this does not mean all life insurance is bad. I think CDS’ are valuable. ---
**Author:** ![Scylla](https://avatars.discourse-cdn.com/v4/letter/s/a5b964/32.png) [@Scylla](https://boards.straightdope.com/u/Scylla)\ **Post date:** [November 26, 2011, 9:56pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851/2164 "2011-11-26T21:56:36Z")
> [@elucidator](#): > > Boy, I sure would! Especially if I ever said any such thing. You said that the loan applications were down, and attributed that to your preferred thesis. Someone else pointed out that if one has little expectation of succeeding, one is much less likely to go through the process, which ain’t that much fun. IIRC, you pointed out that such an argument was simply too stupid for you to seriously consider, then therefore, once again, you win. Actually that’s bullshit too. You took a rather liberal interpretation of an article you posted to suggest that all kinds of people couldn’t get loans who should have, and then you ran in terror when it was pointed out that you had actually made an argument that required a cite. Since then you’ve been playing all kinds of gymnastics to avoid the cite. Perhaps I’ll make a compilation post of this, so that we can all relive the fun. ---
**Author:** ![Zeriel](https://avatars.discourse-cdn.com/v4/letter/z/58956e/32.png) [@Zeriel](https://boards.straightdope.com/u/Zeriel)\ **Post date:** [November 26, 2011, 10:34pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851/2165 "2011-11-26T22:34:26Z")
> [@Scylla](#): > > I appreciate the balanced cite. The latter one seems to indicate that your initial assessment was incorrect. I also have an issue with the way we are measuring things. > > If I sell you a CDS for 10K of a US treasury for 1 penny, the notional value of that contract is 10K. The actual value is only a penny. As I read the second quote, though, the RISK associated with that CDS can only really be assessed as “somewhere between $10K and $0.01, depend on the specifics of the contracts involved, but (based on the 10% of gross amount estimate) close to $1,000.” Also note that you can sell that same CDS to many, many people regardless of the initial value of the asset covered. I had another cite, which was a blog so I didn’t bother, that noted that part of the problem here is that everyone’s getting good estimates for the CDS market since it crashed, but there aren’t any particular estimates for the amount described by “fraction of the bond market covered by CDS instruments”. > [@](#): > > I would agree that the CDS market has been abused. Just as, in the past, markets for life insurance have been abused. To me this does not mean all life insurance is bad. > I think CDS’ are valuable. I have no particular opinion on the value of CDS’ in general. But two specific things: 1. CDS’ should only be able to be issued, similarly to life insurance, when the purchasing entity has a quantifiable stake in the default in question. Depending on how much we trust Wall Street this could be anything from “you can only buy a CDS on a debt owed to you” to (similar to life insurance, where you can’t generally take out a policy on someone else without their consent) “you require the affirmative consent of the entity actually at risk in a default situation”. Summarize this as “naked default swaps need to die”. 2. Again, like insurance, CDS issuers need to be regulated so that they must carry sufficient assets to cover the actuarial risk. Those assets probably shouldn’t be allowed to be composed of other swaps to prevent the circle-jerk we had going on. Also, given 2008, the actuarial risk needs to be pretty damn high for a while until we have better long-term data on the performance of these instruments. Summarize this as “if you’re going to short sell, you had better have actual reserves to back it up if you guessed wrong”. ---
**Author:** ![Zeriel](https://avatars.discourse-cdn.com/v4/letter/z/58956e/32.png) [@Zeriel](https://boards.straightdope.com/u/Zeriel)\ **Post date:** [November 26, 2011, 10:40pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851/2166 "2011-11-26T22:40:22Z")
NETA: I note a good bit of the problem here is that the lack of oversight or standardization on CDS means that agreeing on a method of measurement is not the easiest thing in the world. But despite the fact they’re hard to quantify, not really standardized, and don’t have a lot of best practices associated, there are trillions of dollars worth of them out in the wild already. I’d be crucified if I tried to deploy a software package that was that untested and unstandardized, no matter how much benefit it gave me in the short term. ---
**Author:** ![elucidator](https://avatars.discourse-cdn.com/v4/letter/e/8edcca/32.png) [@elucidator](https://boards.straightdope.com/u/elucidator)\ **Post date:** [November 26, 2011, 11:41pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851/2167 "2011-11-26T23:41:43Z")
> [@Scylla](#): > > …Perhaps I’ll make a compilation post of this, so that we can all relive the fun. Never bluff a Texan, hoss. Double dog dare you. ---
**Author:** ![Scylla](https://avatars.discourse-cdn.com/v4/letter/s/a5b964/32.png) [@Scylla](https://boards.straightdope.com/u/Scylla)\ **Post date:** [November 30, 2011, 1:26pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851/2168 "2011-11-30T13:26:10Z")
Miley Cyrus just made a music video in support of the Occupy movement. It’s over. I’ve won. ---
**Author:** ![Trion](https://avatars.discourse-cdn.com/v4/letter/t/ccd318/32.png) [@Trion](https://boards.straightdope.com/u/Trion)\ **Post date:** [November 30, 2011, 1:57pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851/2169 "2011-11-30T13:57:23Z")
> [@Scylla](#): > > Miley Cyrus just made a music video in support of the Occupy movement. > It’s over. I’ve won. You sound like you don’t like Miley Cyrus. You know who doesn’t like Miley Cyrus? Hipsters, that’s who. ---
**Author:** ![Zeriel](https://avatars.discourse-cdn.com/v4/letter/z/58956e/32.png) [@Zeriel](https://boards.straightdope.com/u/Zeriel)\ **Post date:** [November 30, 2011, 3:27pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851/2170 "2011-11-30T15:27:03Z")
> [@Scylla](#): > > Miley Cyrus just made a music video in support of the Occupy movement. > It’s over. I’ve won. How does it feel to have turned into everyone’s cranky grandfather, Scylla? ---
**Author:** ![elucidator](https://avatars.discourse-cdn.com/v4/letter/e/8edcca/32.png) [@elucidator](https://boards.straightdope.com/u/elucidator)\ **Post date:** [November 30, 2011, 4:49pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851/2171 "2011-11-30T16:49:27Z")
It’s his strongest point so far. ---
**Author:** ![Budget\_Player\_Cadet](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/budget_player_cadet/32/205_2.png) [@Budget\_Player\_Cadet](https://boards.straightdope.com/u/Budget_Player_Cadet)\ **Post date:** [November 30, 2011, 5:19pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851/2172 "2011-11-30T17:19:24Z")
> [@Scylla](#): > > Miley Cyrus just made a music video in support of the Occupy movement. > It’s over. I’ve won. Fuuuuuuck… Quick, someone get Rush up there to counteract this amazing faggotry, and _pronto_! ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [November 30, 2011, 5:43pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851/2173 "2011-11-30T17:43:05Z")
> [@Scylla](#): > > Miley Cyrus just made a music video in support of the Occupy movement. > It’s over. I’ve won. I thought it was prrrretty cool! ---
**Author:** ![Budget\_Player\_Cadet](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/budget_player_cadet/32/205_2.png) [@Budget\_Player\_Cadet](https://boards.straightdope.com/u/Budget_Player_Cadet)\ **Post date:** [November 30, 2011, 6:24pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851/2174 "2011-11-30T18:24:43Z")
> [@John\_Mace](#): > > I thought it was prrrretty cool! Come on dude, your liberal bias is showing. :mad: ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [November 30, 2011, 6:28pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851/2175 "2011-11-30T18:28:21Z")
> [@Budget\_Player\_Cadet](#): > > Come on dude, your liberal bias is showing. :mad: SNL joke. I wasn’t sure exactly how to transcribe the “pretty cool” thing. All I know about MC is what I’ve seen on SNL when they mock her. Oh wait, I did see the show that she hosted and she did a nice little impersonation of Justine Bieber! ---
**Author:** ![Enderw24](https://avatars.discourse-cdn.com/v4/letter/e/ba9def/32.png) [@Enderw24](https://boards.straightdope.com/u/Enderw24)\ **Post date:** [November 30, 2011, 7:19pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851/2176 "2011-11-30T19:19:45Z")
Scylla, I’ll make you a deal. I, for one, will go ahead and cede the argument that you have a vast sum of knowledge in areas of mortgages and securities and that you had no idea that what the bankers and investors were doing would be a problem and, therefore, no one could have predicted the total collapse of the economy. It was a complete mystery. An enigma. Ignorance fought now, we see the light! I’ll go ahead and grant you that. Here’s the thing, though. In 2007, credit default swaps equalled 77 trillion dollars. That’s trillion with a trillion. In comparison, the entire world’s GDP was 63 trillion. So if I grant you that no one could have forseen this economic collapse, then will you grant me that playing with money in excess of Earth’s entire economy without a clear understanding of its downside was a bad idea? ---
**Author:** ![RTFirefly](https://avatars.discourse-cdn.com/v4/letter/r/c77e96/32.png) [@RTFirefly](https://boards.straightdope.com/u/RTFirefly)\ **Post date:** [November 30, 2011, 7:26pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851/2177 "2011-11-30T19:26:51Z")
> [@Scylla](#): > > Miley Cyrus just made a music video in support of the Occupy movement. > It’s over. I’ve won. Hmmm…this sounds like “your favorite cult band just got discovered by the hoi polloi. Sucks to be you.” Except in this case, none of the cult band’s fans wanted it to remain a cult band; quite the opposite. That people like Miley Cyrus are making music videos in support of the movement demonstrates that it’s no longer dependent on the presence of protesters on the ground in a handful of locations around the country. Maybe the Jonas Brothers or Justin Bieber will be next - and if so, I’m all for it. ---
**Author:** ![Gyrate](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/gyrate/32/3588_2.png) [@Gyrate](https://boards.straightdope.com/u/Gyrate)\ **Post date:** [November 30, 2011, 11:58pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851/2178 "2011-11-30T23:58:01Z")
I would have pegged the video as “Miley Cyrus’s desperate attempt to remain hip and relevant”. Hannah Montana is so last decade. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [December 1, 2011, 12:09am UTC](https://boards.straightdope.com/t/occupywallstreet/596851/2179 "2011-12-01T00:09:02Z")
Girl gotta grow up sometime! ---
**Author:** ![Scylla](https://avatars.discourse-cdn.com/v4/letter/s/a5b964/32.png) [@Scylla](https://boards.straightdope.com/u/Scylla)\ **Post date:** [December 1, 2011, 12:50am UTC](https://boards.straightdope.com/t/occupywallstreet/596851/2180 "2011-12-01T00:50:49Z")
> [@Enderw24](#): > > Scylla, > > I’ll make you a deal. I, for one, will go ahead and cede the argument that you have a vast sum of knowledge in areas of mortgages and securities and that you had no idea that what the bankers and investors were doing would be a problem and, therefore, no one could have predicted the total collapse of the economy. It was a complete mystery. An enigma. Ignorance fought now, we see the light! I’ll go ahead and grant you that. > > Here’s the thing, though. In 2007, credit default swaps equalled 77 trillion dollars. That’s trillion with a trillion. In comparison, the entire world’s GDP was 63 trillion. > > So if I grant you that no one could have forseen this economic collapse, then will you grant me that playing with money in excess of Earth’s entire economy without a clear understanding of its downside was a bad idea? No such deal, I’m afraid. I’ve seen quite a few figures as to what the value of CDS’ might have been, but as a largely unregulated instrument I don’t think there is much besides estimates. Anyway, you need to cite that value. Also, im pretty sure that’s not the market value, it’s the notional value. The cost of many of these was and is mere basis points (100s of one percents,) and at least some of these contracts were offsetting, so no, it would be no surprise and no big deal even if you did have a cite. Finally, I am an expert or not whether or not you concede it, so it makes no difference to me if you “grant” it to me. [Previous page](https://boards.straightdope.com/t/occupywallstreet/596851.md?page=108) [Next page](https://boards.straightdope.com/t/occupywallstreet/596851.md?page=110)