# \#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:** 78
**Author:** ![Zeriel](https://avatars.discourse-cdn.com/v4/letter/z/58956e/32.png) [@Zeriel](https://boards.straightdope.com/u/Zeriel)\ **Post date:** [November 3, 2011, 4:38am UTC](https://boards.straightdope.com/t/occupywallstreet/596851/1541 "2011-11-03T04:38:25Z")
> [@Scylla](#): > > But you said it was he CDS instruments that did it. I’m asking how. It’s a legitimate question. I’ve already covered that elsewhere, but my opinion based on my observations of the market is that the total money lost in the last crash was primarily driven by the CDS house of cards collapsing in on itself. I know you disagree, but you have every incentive to do so given your career and training. Which is why, incidentally, it’s hard to take your explanations completely at face value, despite your experience in the field. Conflict of interest and all. > [@](#): > > The difference is, when I go to work every day, I can do it with a clear conscience. Anyone who works for an investment bank that is in any way involved with CDS or subprime mortgages cannot. My conscience is clear. I don’t see how you can sleep at night seeing all the people you’ve killed with salmonella, not to mention the fact that you are responsible for the bird flu crisis and all the deths fom that. Murderer! [/quote] Do you think you’re joking, or do you legitimately have me confused with the actual chicken farmer with a completely different name upthread? > [@](#): > > It’s called a “short sale” in it’s simplest form. Are you seriously against the practice? I’ve no problem with short sales, but I’m adamantly against short sales on the margin whether it’s stock or CDS or whatever. There’s a profound difference between “I’m betting against this and I have the money to cover it if I’m wrong” and “I’m betting against this, and I can totally cover it when my IOUs come in, honest, you guys.” ---
**Author:** ![Mr.Svinlesha](https://avatars.discourse-cdn.com/v4/letter/m/22d042/32.png) [@Mr.Svinlesha](https://boards.straightdope.com/u/Mr.Svinlesha)\ **Post date:** [November 3, 2011, 6:45am UTC](https://boards.straightdope.com/t/occupywallstreet/596851/1542 "2011-11-03T06:45:08Z")
**Scylla:** Yes! Respond, please. ---
**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 3, 2011, 9:45am UTC](https://boards.straightdope.com/t/occupywallstreet/596851/1543 "2011-11-03T09:45:18Z")
> [@Scylla](#): > > It’s called a “short sale” in it’s simplest form. Are you seriously against the practice? Specifically “naked short selling” or “naked shorting”. You can sell short and have the ability to cover. Naked shorting is a much more questionable enterprise. ---
**Author:** ![Scylla](https://avatars.discourse-cdn.com/v4/letter/s/a5b964/32.png) [@Scylla](https://boards.straightdope.com/u/Scylla)\ **Post date:** [November 3, 2011, 12:33pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851/1544 "2011-11-03T12:33:55Z")
> [@Gyrate](#): > > Specifically “naked short selling” or “naked shorting”. You can sell short and have the ability to cover. Naked shorting is a much more questionable enterprise. I agree. ---
**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 3, 2011, 1:15pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851/1545 "2011-11-03T13:15:15Z")
> [@Scylla](#): > > I agree. And the fact that BoA is more or less doing this to the tune of _$75,000,000,000,000_ doesn’t bother you? ---
**Author:** ![Scylla](https://avatars.discourse-cdn.com/v4/letter/s/a5b964/32.png) [@Scylla](https://boards.straightdope.com/u/Scylla)\ **Post date:** [November 3, 2011, 1:18pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851/1546 "2011-11-03T13:18:24Z")
> [@Budget\_Player\_Cadet](#): > > And the fact that BoA is more or less doing this to the tune of _$75,000,000,000,000_ doesn’t bother you? Cite? ---
**Author:** ![Zeriel](https://avatars.discourse-cdn.com/v4/letter/z/58956e/32.png) [@Zeriel](https://boards.straightdope.com/u/Zeriel)\ **Post date:** [November 3, 2011, 1:30pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851/1547 "2011-11-03T13:30:22Z")
> [@Budget\_Player\_Cadet](#): > > And the fact that BoA is more or less doing this to the tune of _$75,000,000,000,000_ doesn’t bother you? In fairness to the banks, I haven’t seen any figures higher than an estimated $67 trillion or so for the entire market with naked swaps being something on the estimated order of 80%. The most recent estimate I can find (being lazy) is around $26T outstanding as of mid-2010. The problem with that, of course, is that the CDS market is unregulated to the extent that all of those figures are essentially estimates. ---
**Author:** ![RTFirefly](https://avatars.discourse-cdn.com/v4/letter/r/c77e96/32.png) [@RTFirefly](https://boards.straightdope.com/u/RTFirefly)\ **Post date:** [November 3, 2011, 3:03pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851/1548 "2011-11-03T15:03:50Z")
> [@Scylla](#): > > RTFs article is collosally stupid. But as usual, you can’t be bothered to actually grapple with it. I’ve come to the conclusion that there is nothing inside your sorry skull but a bucket of liquid shit and a superior attitude. Must be hard to manage the latter, given the former, but you seem to pull it off quite well. Everybody has a talent. That’s yours. ---
**Author:** ![RTFirefly](https://avatars.discourse-cdn.com/v4/letter/r/c77e96/32.png) [@RTFirefly](https://boards.straightdope.com/u/RTFirefly)\ **Post date:** [November 3, 2011, 3:09pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851/1549 "2011-11-03T15:09:19Z")
> [@Scylla](#): > > I used to have a farm myself. I learned not to wrestle with a pig. You just get dirty and the pig likes it. Feel free to wallow in the mud hollow of your ignorance without the cleansing light of knowledge. We should all be grateful to you, Little Lord Fuckleroy, that you occasionally condescend to stop by our pig wallow and tell us how dirty we all are. ---
**Author:** ![Hamlet](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hamlet/32/2818_2.png) [@Hamlet](https://boards.straightdope.com/u/Hamlet)\ **Post date:** [November 3, 2011, 3:48pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851/1550 "2011-11-03T15:48:12Z")
> [@RTFirefly](#): > > Little Lord Fuckleroy This made me smile. ---
**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 3, 2011, 4:17pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851/1551 "2011-11-03T16:17:50Z")
> [@RTFirefly](#): > > We should all be grateful to you, Little Lord Fuckleroy, that you occasionally condescend to stop by our pig wallow and tell us how dirty we all are. I bet you can squeal like a pig. Weeeeeeee! ---
**Author:** ![elucidator](https://avatars.discourse-cdn.com/v4/letter/e/8edcca/32.png) [@elucidator](https://boards.straightdope.com/u/elucidator)\ **Post date:** [November 3, 2011, 4:19pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851/1552 "2011-11-03T16:19:52Z")
> [@Scylla](#): > > Cite? Give him a link to the Associated Press website and say “It’s in there. Good luck!” ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [November 3, 2011, 4:31pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851/1553 "2011-11-03T16:31:42Z")
> [@Zeriel](#): > > In fairness to the banks, I haven’t seen any figures higher than an estimated $67 trillion or so for the entire market with naked swaps being something on the estimated order of 80%. The most recent estimate I can find (being lazy) is around $26T outstanding as of mid-2010. > > The problem with that, of course, is that the CDS market is unregulated to the extent that all of those figures are essentially estimates. The GNP is around 16 trillion. That is all the goods and services in the whole country in a year. One bank , BofA, sells 75 trillion in SWAPS. It is fantasy banking. They sold insurance they could not pay off. if your local insurance company did that the government would have ended it quickly. But the bankers got SWAPS outside the purview of insurance regulation by coming up with a nifty name for them. They had enough political power to get away with it. ---
**Author:** ![RTFirefly](https://avatars.discourse-cdn.com/v4/letter/r/c77e96/32.png) [@RTFirefly](https://boards.straightdope.com/u/RTFirefly)\ **Post date:** [November 3, 2011, 4:37pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851/1554 "2011-11-03T16:37:08Z")
How our big corporations evade U.S. corporate taxes: Google’s “Double Irish/Dutch Sandwich” with a side of Bermuda. > [@](#): > > Irish law allows Google to treat Ireland Holdings as a Bermuda resident for tax purposes even though it was incorporated in Ireland so long as the management and control of the entity is in Bermuda. The corporate income tax rate in Bermuda is zero percent and Ireland’s is 12.5percent. In a sense, Ireland Holdings became a dual resident company: It remained an Irish corporation because that is its place of incorporation. But for Irish tax purposes,Ireland Holdings became a resident of Bermuda by reporting that its management is in Bermuda. This made Ireland Holdings exempt from Irish taxes. > > Also, Ireland Holdings created a Dutch subsidiary, Google Netherlands BV (“Netherlands BV”), which in turn created a third-tier subsidiary, Google Ireland Limited (“Ireland Limited.”) in Ireland. Ireland Holdings licensed its patent rights to Netherlands BV, which in turn licensed those rights to Ireland Limited. Ireland Limited then began collecting billions of dollars in advertising revenues from the use of these technologies. > > For U.S. tax purposes, Google has an Irish incorporated subsidiary with Bermuda tax residency with branches in the Netherlands and Ireland. The Irish branch conducts substantially all of Google’s business in Europe, the Middle East and Africa. However,Ireland Holdings earnings are essentially tax free because Ireland Holdings is treated as a tax resident of Bermuda. > > Since 1997, the Treasury has allowed corporations to treat a subsidiary as a separate corporation or to “disregard” it as a separate entity for U.S. tax purposes simply by checking a box on the tax form – commonly referred to as the “check the box” rule.Thanks to this rule, multinationals saved billions in taxes. > > Both Netherlands BV and Ireland Limited had “checked the box,” and therefore each was treated as a disregarded entity or “tax nothing” for U.S. purposes. But both were treated as corporations for all non-U.S. tax purposes. Thus, a company can disappear“for purposes of U.S. law while remaining relevant for purposes of all other fiscal systems,thereby facilitating a host of tax system arbitrage opportunities. Check out [pp. 14-16 at this link](http://www.scribd.com/fullscreen/71433950) for the above text, and a very nice diagram of this flimflammery. Why in heaven’s name would any of us be upset at how our betters run our world? Thanks to [investment guru Barry Ritholtz](http://www.ritholtz.com/blog/2011/11/corporate-tax-avoidance/) for the link. ([His blog](http://www.ritholtz.com/blog/) is one of my regular reads, even though I have no interest in investing in anything besides an index fund.) I’m sure our Little Lord regards him as just another pig in the wallow, too. ---
**Author:** ![Scylla](https://avatars.discourse-cdn.com/v4/letter/s/a5b964/32.png) [@Scylla](https://boards.straightdope.com/u/Scylla)\ **Post date:** [November 3, 2011, 4:44pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851/1555 "2011-11-03T16:44:15Z")
> [@gonzomax](#): > > The GNP is around 16 trillion. That is all the goods and services in the whole country in a year. One bank , BofA, sells 75 trillion in SWAPS. It is fantasy banking. They sold insurance they could not pay off. if your local insurance company did that the government would have ended it quickly. But the bankers got SWAPS outside the purview of insurance regulation by coming up with a nifty name for them. They had enough political power to get away with it. Do you have a cite that shows that BOA wrote 75 trillion in swaps? ---
**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 3, 2011, 4:46pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851/1556 "2011-11-03T16:46:08Z")
> [@Scylla](#): > > Cite? Hmm… Actually, the best I can find for citations are more or less these: [http://problembanklist.com/fdic-to-cover-losses-on-trillion-bank-of-america-derivative-bets-0419/](http://problembanklist.com/fdic-to-cover-losses-on-trillion-bank-of-america-derivative-bets-0419/) [http://blog.buzzflash.com/node/13094](http://blog.buzzflash.com/node/13094) The fact that I’ve never heard of either of those sites may mean that these are not good sources. Anyone else got a better source for this information? ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [November 3, 2011, 5:03pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851/1557 "2011-11-03T17:03:48Z")
[http://www.thenewamerican.com/economy/markets-mainmenu-45/9536-big-banks-shift-their-derivatives-exposure-onto-us-taxpayers](http://www.thenewamerican.com/economy/markets-mainmenu-45/9536-big-banks-shift-their-derivatives-exposure-onto-us-taxpayers) Bank of America 75 trillion Morgan Chase 79 trillion Total amount of derivatives is 40 X the entire stock market 10 X the value of every stock on the planet 23 x GNP Just imagine how much money the people who wrote the SWAPs made? When Brooksley Born testified about the dangers of unregulated derivatives, Greenspan, and the other Libertarian /anti regulation groups mistreated her badly, claiming she did not understand the market is self regulating. They stripped her of any regulation powers and ridiculed her. ---
**Author:** ![Trom](https://avatars.discourse-cdn.com/v4/letter/t/958977/32.png) [@Trom](https://boards.straightdope.com/u/Trom)\ **Post date:** [November 3, 2011, 5:24pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851/1558 "2011-11-03T17:24:48Z")
> [@Scylla](#): > > Do you have a cite that shows that BOA wrote 75 trillion in swaps? They didn’t. Last quarter the notional value of all the derivatives held by BAC - options, swaps, futures, etc. - was $75 trillion. $46 trillion was swaps. [Cite](http://www.occ.gov/topics/capital-markets/financial-markets/trading/derivatives/dq211.pdf) from the OCC’s quarterly report. (pdf) Table 2, page 26 of the PDF. I feel like people are implying that notional value is a somehow a useful measure of market and/or credit risk. It isn’t. ---
**Author:** ![Scylla](https://avatars.discourse-cdn.com/v4/letter/s/a5b964/32.png) [@Scylla](https://boards.straightdope.com/u/Scylla)\ **Post date:** [November 3, 2011, 5:35pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851/1559 "2011-11-03T17:35:59Z")
> [@RTFirefly](#): > > How our big corporations evade U.S. corporate taxes: Google’s “Double Irish/Dutch Sandwich” with a side of Bermuda. > > Check out [pp. 14-16 at this link](http://www.scribd.com/fullscreen/71433950) for the above text, and a very nice diagram of this flimflammery. Why in heaven’s name would any of us be upset at how our betters run our world? > > Thanks to [investment guru Barry Ritholtz](http://www.ritholtz.com/blog/2011/11/corporate-tax-avoidance/) for the link. ([His blog](http://www.ritholtz.com/blog/) is one of my regular reads, even though I have no interest in investing in anything besides an index fund.) I’m sure our Little Lord regards him as just another pig in the wallow, too. ??? Apparently this is directed at me because it contradicts something I said. that is??? Oh… Only a total idiot invests in index funds. It’s pretty simple really. In 1999 the biggest component of the S&P was tech… Right before it crashed. At the end of '07 the S&P was something like 21% financials… Right before they crashed. Since most indexes are market weighted you will always be putting most of your money into the most overvalued, bubble type of assets, and the least amount of money into the most undervalued assets. The strategy of an index investor can best be described as “buy high, sell low.” Best for the investor that wishes to ensure that they step in front of every bus. Secondly, index funds play poker while showing their hand. If, on Friday, XYZ gets added to an index, this is, by definition, common knowledge. Intelligent investors will be the stock in advance, driving up the price, waiting for Friday when each and every index fund must buy it. This can create tracking error between the funds and the indexes they are trying to emulate, which means your fund does worse than the index. To combat this, some index funds don’t even own the underlying securities of the index, or exchange a portion of them for derivatives. The funds need to keep cash on hand for redemptions, so they have to buy dome even odder derivatives to make up for this. These derivatives mostly just track on a day to day basis, but don’t handle gap up or down movements that can happen over night. To try to combat this they buy other derivatives… You get the idea. Tracking error is a real issue. At some point in the near future a couple of the more esoteric index funds are going to be likely to collapse as a result of their inability to compensate for their compensations. But hey! I’m glad you’re investing in index funds. You deserve them. Me, I personally pick my stocks for investment with a little bit more intelligence than the random predefined mediocrity and both barrels of the shotgun in the face of any market correction that you get with an index fund. For example, i put a predefined percentage of my money into stocks from certain lists I’ve produced. One such list is simply stocks that have raised their dividends for 25 years or more. Companies that do that tend to be stable, have good management, sustainable markets, and consistent earnings. On a ten year basis that list has produced an average annual 10 year return of 7.35% versus the S&P of 1.41 (data as of dec. 31, 2010.). The list is just my starting point. I work a few more screens in, and I tend to do a little bit better than that. But hey! You are really smart you buy indexes which means you base your stock choices on popularity as the sole criteria. Good job. ---
**Author:** ![Zeriel](https://avatars.discourse-cdn.com/v4/letter/z/58956e/32.png) [@Zeriel](https://boards.straightdope.com/u/Zeriel)\ **Post date:** [November 3, 2011, 5:54pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851/1560 "2011-11-03T17:54:14Z")
never mind, we’re having a terminology issue. [Previous page](https://boards.straightdope.com/t/occupywallstreet/596851.md?page=77) [Next page](https://boards.straightdope.com/t/occupywallstreet/596851.md?page=79)