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Author Topic: Hoffa, Teamsters, & Credit Default Swaps, bookies, and Clinton  (Read 1677 times)
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WhiskeyGirl
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« on: December 25, 2009, 10:32:58 AM »

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"Certain financial firms, have been or are marketing and/or underwriting a strategy where bonds in YRCW would be bought by investors with the intent of voting against the exchange, thereby triggering a bankruptcy that would pay the investors and possible other financial firms huge profits from the high CDS payments which would be triggered by a YRC bankruptcy or liquidation," Hoffa wrote. "The profit from the YRCW CDSs would far outweigh losses from the failed YRCW bonds."

How much was made by all the CDS business?

I've read that CDS are much like casino gambling.  In the end, the house always wins. 

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"As I am sure you know, CDSs are nothing more than insurance contracts, i.e., the 'swap' of a premium for a guarantee that a payment will be triggered by the financial default being insured," Hoffa continued. "The YRCW long bond/CDS marketing scheme by certain banks and hedge funds that are located within your jurisdiction, is nothing more than an attempt to have investors vote against a restructuring that would save YRCW."

CDS are not insurance contracts.  Months ago, it was explained that there were traditional insurance products available to cover the risk associated with all this credit...

Based on the industry practices, the insurance premiums would be extreme...

CDS were an INNOVATIVE practice to save/make money on RISKY business.

more here - http://www.auto-mobi.info/index.php?option=com_content&task=view&id=12644&Itemid=50

How can govrenment regulate the spin of a roulette wheel?  A poker game?

Is it possible that everyone at the poker table will take away the pot?

Everyone wins at roulette?

CDS are not insurance contracts.

The CDS gambling casino came into existence thanks to Washington.  Deregulation, profit, and 'innovativ' financial reforms.

jmho
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WhiskeyGirl
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« Reply #1 on: December 25, 2009, 10:41:47 AM »

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The financial reform legislation that passed the House last week doesn’t fix the derivatives market but there is still time to make it right. The Senate hasn’t passed its version of the bill and all Senators need to do is include a provision stopping the Federal government from preventing enforcement of state and local criminal gaming and bucket shop laws.

With this simple legislative change bookies that run illegal derivatives casinos will face criminal prosecution rather than become millionaires who benefit from government bailouts and guarantees. The problem that needs fixing is that in 2000 Congress and the Clinton Administration decided to de-criminalize gambling and bucket shops so long as these activities are couched as enterprises trading credit default swaps and other financial derivatives. Since 2000, Wall Street bookies have run a booming gaming business while the rest of us pay for bets that go bad.

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About 10 years ago the Commodities Futures Modernization Act of 2000 was signed into law by President Clinton and specifically exempted states from enforcing their gambling and bucket shop laws in connection with commodities contracts and dealers. In the legislation the definition of a commodities contract was expanded to include all sorts of financial contracts that have little to do with actual commodities as most people understand the term. As a result, the scope and reach of the gaming and bucket shop exemption grew to unbelievable proportions. Some experts estimate that the credit default swap and derivatives market is as large as $600 trillion. Since the law was changed the U.S. economy has been held hostage by Wall Street casinos where large institutions make book for gamers that belly up to the bar with trillions of other people’s money.

These commodities sound a lot like the carbon markets...

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Three of the biggest failures of the last 18 months were bucket shops, i.e., Madoff, Lehman and AIG. Each one of these fine citizens of financial society sold one sided and unhedged contracts that they couldn’t honor and conveniently forgot to mention that they were insolvent. Just the fallout from these scams should motivate Congress and the Obama Administration to immediately repeal the exemption from bucket shop laws contained in the current commodities legislation. Of course, each of the big three failures had other big things wrong with them but each also had the common theme of being a bucket shop. Who knows if all three failures would have taken place, or at their size and scope, without the exemption from criminal bucket shop laws?

Sounds like the Obama administration isn't fixing anything.  They're just keeping the global casino open with longer hours.

http://seekingalpha.com/article/178013-it-s-not-too-late-for-congress-to-fix-the-derivatives-market
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All my posts are just my humble opinions.  Please take with a grain of salt.  Smile

It doesn't do any good to hate anyone,
they'll end up in your family anyway...
WhiskeyGirl
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« Reply #2 on: December 25, 2009, 10:50:11 AM »

From the comments –

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The bucket shop laws were enacted as a reaction to the devastating financial crisis of 1907, one that was very similar to the debacle we have just experienced. Quite simply, they outlawed gambling on the stock and commodities markets. Our forbears resented the destruction of wealth by gambling in financial markets and attempted to put a stop to it.

It is important to observe that CFMA, the single most destructive piece of deregulation ever perpetrated by Congress, specifically exempted CDS from regulation as gambling. Why? Because CDS, like any inurance contract that is not suppported by an insurable interest, are gambling contracts.

To answer hampden, those of us who advocate regulating CDS as either insurance, with a requirement of insurable interest on the part of the buyer, and adequate capital on the part of the seller, or as gambling when there is no insurable interest, are not Luddites, nor are we peasants with pitchforks.

We are investors whose life savings have been seriously reduced by the casino on Wall Street, workers who have lost jobs due to the meltdown and ensuing recession, victims of legalized crime and the idiotic ideology of totally laissez faire capitalism.

If this country chooses to forget the lessons learned in 1907, 1929, and now 2007-2009, we are doomed to suffer more of the same.

Is it the capitalism of buying and selling our government that stinks?  Legislature?  White House?
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All my posts are just my humble opinions.  Please take with a grain of salt.  Smile

It doesn't do any good to hate anyone,
they'll end up in your family anyway...
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