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.
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.
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.
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.
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 have no particular opinion on the value of CDS’ in general. But two specific things:
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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”.
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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”.
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.
Never bluff a Texan, hoss. Double dog dare you.
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.
How does it feel to have turned into everyone’s cranky grandfather, Scylla?
It’s his strongest point so far.
Fuuuuuuck…
Quick, someone get Rush up there to counteract this amazing faggotry, and pronto!
I thought it was prrrretty cool!
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!
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?
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.
I would have pegged the video as “Miley Cyrus’s desperate attempt to remain hip and relevant”. Hannah Montana is so last decade.
Girl gotta grow up sometime!
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.