Wednesday, December 21, 2011

Wall Street Crapshoot


So you think that we learned something from the 2008 financial meltdown?

Think again.

A major factor in the financial crisis was the use of synthetic derivatives that essentially turned into a casino game. These abstruse financial instruments brought about, among other things, the collapse of Lehman Brothers, the bailout of AIG and numerous banks and the bankruptcy of the country of Iceland.

So it would seem that, if anything, some sanity would be restored to the use of these mechanisms.

Not so.

NADEX, the North American Derivatives Exchange has proposed introducing derivative contracts that would, in essence, allow "investors" to bet on the outcome of elections.

Reuters reports, "A small Chicago futures exchange aims to be the first regulated U.S. market to offer legal betting on the outcome of a U.S. presidential election.
The North American Derivatives Exchange is set to ask the Commodity Futures Trading Commission on Monday for its stamp of approval on contracts tied to the winner of the 2012 presidential election as well as on which political party will dominate the U.S. House of Representatives and Senate.
The contracts could start trading as soon as next month, when a series of Republican nominating contests kicks off with the Iowa caucuses on January 3."

REALLY? Is this what the capitalist system, whose supposed purpose is the efficient allocation of capital to productive economic purposes, has become? Up to now this has been the domain of Irish betting parlors.

One has to be, to use Mitt Romney's term, "zany" to imagine what might be next. But apparently "zany" has become the coin of the realm among today's financial whiz kids.

Let's keep those tax breaks for the idle rich (excuse me, "job creators") coming. Some of their "whizzing" will eventually trickle down to the other ninety-nine percent of us.

2 comments:

  1. If Southbridge's tax and spend Councilors, Nikolla, Clemence, Spinelli, Regis, Langevin, Marcucci and LivenGod, along with Clark, can figure out how to make this Ponzi scheme work for our town, just imagine:

    A street sweeper for every street could be bought and used once a year!

    ReplyDelete
  2. aka Jester

    SEC is digging in on derivatives investigations

    1. Posted Sep 1st 2009 12:30PM by Connie Madon
    2. Filed under: Insiders, Law, Scandals, Financial Crisis

    Back when Alan Greenspan (interesting last name) spearheaded the Federal Reserve; a formal Investigation was also launched on “Derivatives”. This particular investigation came to an abrupt end following a “Closed Door” meeting with Greenspan, himself, in attendance.

    What was publicly disclosed from that earlier investigation and this more current SEC Investigation coincidently proved much of the same. The two could almost walk hand-in-hand.

    Snap-Shot: Current Article Excerpts (Quoted Text):

    “Mary Schapiro, chairperson of the the SEC, wants to collect critical data on derivatives transactions to pursue market abuses.”

    Schapiro said that regulators need the data to construct an audit trail to find out who is doing insider trading and market manipulation. The U.S. Senate is investigating the derivatives markets but is up against a brick wall because it cannot pin down who it is that actually pulled the trigger on the trades. So they are relying on the SEC to provide this data. Schapiro said that the SEC is having difficulty identifying derivative investors and the size of their trades.”

    I once read someone else’s take on the word GOD as standing for:

    * “GOD = Gold, Oil, and Drugs”.

    Following that mind set; Here's another take on the word SEC(Securities and Exchange Commission:

    * SEC = Successful Economic Collapse.

    ReplyDelete

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