Hedge Fund Gambling: Fine, Just Keep My Tax Dollars Out of It

By: Monday May 28, 2012 2:55 pm

I don’t have problems with hedge funds per se; I object to the use of the implicit too big to fail guarantee, the Fed’s discount window, political influence, inside information, rigged rules and virtually unlimited depositor funds that go along with any trader at a bank who tries to play this game. The idea that a victory will send profits to the bank balance sheet, but a loss will simply get socialized by the government, turns the idea of risk completely on its head.


JPMorgan’s Loser Trade Shows Importance of Volcker Rule

By: Sunday May 13, 2012 10:40 am

The Whale Trade fail shows that all banks are poised on the brink of disaster. When it happens, the government will pay, not the banks. So why shouldn’t Jamie Dimon’s operation try to make money betting with credit default swaps with someone else’s money?

JPMorgan’s $2 Billion Loss Shows Impotence of the Volcker Rule

By: Friday May 11, 2012 6:40 am

I spent most of yesterday afternoon laughing my ass off about Jamie Dimon’s London Whale loss, but it’s actually not all that funny.

Derivatives Overseer Rules Greek Debt Swap a “Credit Event,” Leading to CDS Payouts

By: Saturday March 10, 2012 11:30 am

The International Swaps and Derivatives Association ruled yesterday that the Greek debt restructuring deal will trigger about $3 billion in credit default swaps, a tiny fraction of the total CDS insurance on the loans. This makes the debt swap a partial “credit event,” or default. Billions of dollars are to be paid out in insurance-like [...]

Greek Debt Talks Still Without Resolution; Bondholders Make Final Offer

By: Monday January 23, 2012 7:41 am

The debt talks between Greece and their bondholders, thought to be a done deal late Friday, spilled into the weekend and still found no resolution as of today. The short version is that the creditors want a higher coupon, or interest rate on the new bonds they’ll accept in exchange for taking at huge hit on the bonds they currently hold.

European Crisis: Multiple Credit Downgrades, Greek Debt Talks Collapse

By: Saturday January 14, 2012 7:30 am

Europe has lived in an almost perpetual state of collapse lately, with promising deals followed by despair. This was one of the despair days.

Arsonists Versus Hostage-Takers

By: Thursday July 7, 2011 11:30 am

Wall Street’s hostage-takers and its arsonists are laughing at the middle class, all the way to the bank.

Damage from Debt Limit Hijacking Has Already Begun

By: Tuesday June 7, 2011 4:50 pm

The latest steaming pile of garbage from the right to justify continued inaction on the economy is that Obama giving a speech on April 13 sank corporate confidence and ruined everything. Aren’t these the same people who grudgingly admit that Obama gives a good speech, but that actions mean more than mere words? Apparently accurately describing Paul Ryan’s budget was an action all by itself.

The Five Stages of Grief, MOTU Edition

By: Saturday October 16, 2010 9:00 am

Watching the MOTUs as their financial services universe shakes and shudders around them reminds me of the five stages of death and dying. There’s lots of denial and anger coming out of the MOTUs, and hints of bargaining, but little sign of depression and acceptance. But it’ll come . . .

This Week in FinReg Implementation

By: Monday August 30, 2010 9:00 am

Regulators have competing goals, or at least goals that distract from one another. They want to ensure price transparency for every trade, and exchanges or clearinghouses as the mechanism. But they also should want to increase the swap participants, so that the market doesn’t get concentrated, adding to risk.

This could end well, or with literally no meaningful changes at all. Banks are placing a lot of money to ensure the latter.

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