North American Gem Inc V.NAG

was bad loans in the real estate industry that sta

[heinz44]

Don't tell me you too believe the BS we are being fed on a daily basis regarding "sub prime" being responsible for this mess................................. Here is the problem


the growth of exponentially leveraged financial derivates................
 
a hybrid security whose value is tied to the value of another underlying security. Create twenty or thirty levels of these hybrids off the same security and then leverage them through the ceiling....and all hell can break loose when the original underlying mortgage fails. Whereas a very small percentage of mortgages are actually failing, the leverage makes it look like the entire mortgage market is falling apart. 
These financial instruments have been around for many years, and no one political administration is responsible. Banks rely on some of them for "hedging" against changes in interest rates, currency values, etc. The speculative side is where the problems lie. One can hedge a postion, but hedging it thirty times makes it no longer a hedged position but an exponentially leveraged speculative position. John Q. Public has no idea that these markets even exist....especially the "secret" markets that are not included on the balance sheets or income statements of multi-national corporations.

Remember this about Over The Counter Derivatives:

1. They have no regulation.
2. They have no standards.
3. Without standards there can be no viable market.
4. They are unlisted
5. They are traded by private treaty negotiation
6. They are valued by "Mark to Model" which is a total cartoon.
7. They have no financial guarantee such as a clearing house.
8. They are unfunded special performance contracts floating in cyberspace. All funds in the OTC Derivatives are taken out as spreads and commissions.
9. More than 50% of the earnings of major international investment banks come from granting in private treaty negotiations these instruments of mass financial destruction.
10. The financial performance of the specific performance contract called OTC Derivatives depends on the financial capacity of the loser in the transaction.
11. Control has been loose in the interest sensitive OTC Derivatives because of multiple dealings outside of the initiating two until no one knows who has what.
12. The replacement value of these instruments is in the multi trillions of dollars.
13. The size of this is more than 2 Trillion dollars in replacement cost. The massive expansion has come in interest sensitive and debt guarantee instruments. Those are the most vulnerable.

$700 billion ...............is f all. There are $61 TRILLION of these instruments sloshing around out there...............so
get ready for this is FAR from over...................
better buy some gold...................stock up.................buy a rifle and head for the bush........fort me, some  south sea island with lots of kitties is preferable