12 replies to this topic

[normxxx]

One of the world's leading experts on credit derivatives, Satyajit Das is the author of a 4,200-page reference work on the subject, among a half-dozen other tomes. As a developer and marketeer of the exotic instruments himself over the past 30 years, he seemed like the ideal industry insider to help [me] get to the bottom of the recent debt crunch— and I expected him to defend and explain the practice. ...

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[Tor]

One of the world's leading experts on credit derivatives, Satyajit Das is the author of a 4,200-page reference work on the subject, among a half-dozen other tomes. As a developer and marketeer of the exotic instruments himself over the past 30 years, he seemed like the ideal industry insider to help [me] get to the bottom of the recent debt crunch— and I expected him to defend and explain the practice. ...

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Thanks Norm, that interesting...totally wrong IMO, but still very interesting. I heard the losses in the market since july was way in excess of the losses possibly stemming from both the CDO's and Housing markets.

[NAV]

One of the world's leading experts on credit derivatives, Satyajit Das is the author of a 4,200-page reference work on the subject, among a half-dozen other tomes. As a developer and marketeer of the exotic instruments himself over the past 30 years, he seemed like the ideal industry insider to help [me] get to the bottom of the recent debt crunch— and I expected him to defend and explain the practice. ...

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This Satyajit guy to me is like a drug pedllar who gives seminars on hazards of drug use. These kind of folks make a living whether the industry is thriving or suffering. Worlds leading expert on derivatives ? Gimme a break...Exotic instrument thug i would say...

Edited by NAV, 23 September 2007 - 06:34 AM.

[ogm]

This horror story is being quoted and reposted all over the internets for the past week. This kind of crap keeps people from making money in the market.

Edited by ogm, 23 September 2007 - 06:43 AM.

[qqqqtrdr]

This horror story is being quoted and reposted all over the internets for the past week.

This kind of crap keeps people from making money in the market.

I agree this garbage is terrible. Individuals gets scared and pull their money out of the market. The more gloom in the headlines on a weekly basis the higher the market goes.

Barry

[pisces]

This horror story is being quoted and reposted all over the internets for the past week.

This kind of crap keeps people from making money in the market.

I agree this garbage is terrible. Individuals gets scared and pull their money out of the market. The more gloom in the headlines on a weekly basis the higher the market goes.

Barry

AMEN to that,the wall of worry is firmly in place.and the Market will climb it.always has in the past.

thats the way it has to be,we need buyers later on to fuel the bullmarket ,



when the news on all those worry-items improves somewhat,thats when we see the first meaningfull correction,

Overall same old ,same old,wash,rinse,repeat,there is nothing new under the sun

make it easy on yourself and follow some of the exellent posters on this board,that have established a winning record over time,they will sound the warning bell when the time comes,as they have in the past.use your time to figure out how to make the most money.



May the trading gods smile upon you!



Pisces.

[Tor]

4200 pages - wow that guys got lots of time on his hands!

[normxxx]

I heard the losses in the market since july was way in excess of the losses possibly stemming from both the CDO's and Housing markets.

What you missed is that the sub-prime crap, aka 'toxic waste' was simply the underpinning for the inverted pyramid of ever proliferating financial derivatives that were piled on, one on top of the other. Especially when they were bundled together in mega-derivatives that were then blessed with ratings of 'AAA', since so many of them were included in any one bond that the failure of even the projected number would have had no noticeable affect. These then proliferated in the commercial paper (CP) market as ABS's, CDOs, ... etc. When it became apparent that the models of the projected failure rate of the crap (aka 'toxic waste' or equity tranches) did not provide for correlated events (like a housing appreciation slowdown or even recession), and consequently the projections were way too low— so that holders of these securities might eventually lose some REAL money— THE WHOLE INTERNATIONAL CP MARKET FROZE UP!

THAT was enough to bring nearly all international business to a near halt and MIGHTILY GOT THE ATTENTION OF THE CBers (nearly half a trillion dollars, world wide, was injected into the markets in a panic to try to unlock them— with only mixed success, so far)! In the end, it also brought down many perfectly legitimate mortgage lenders and even Too Big To Fail Northern Rock, the fifth-biggest lender in the UK:

The court of the Bank of England is understood to have met last night to approve the unprecedented support. Northern Rock is believed to be paying the Bank of England a penal rate of interest believed to be 6.75pc - a whole percentage point above base rate. "Customer deposits are safe," said a source to close to the Bank.

See: Subprime crisis

I have been watching this happen and have been expecting this outcome (eventually) for almost two years, as it was readily apparent that the credit market at half a QUADrillion dollars of derivatives was hopelessly and helplessly out of control. Every engineer knows what inevitably happens when you get an out of control, positive feedback system— the output increases parabolically until it goes vertical, THEN CRASHES.

[normxxx]

FWIW, I expect TEOTWAWKI (The End Of The World As We Know It) not to occur before late 2009— next year should be a middling to good year— for the stock market (even housing may stabilize a bit). For this year, I think we will still retest the August lows, then it's off to the races. The 'smart money' still has not unloaded, and will probably need a year or so to do so. Of course, there's always the possibility of an 'accident' or miscalculation before then...

Edited by normxxx, 23 September 2007 - 12:08 PM.

[Tor]

I heard the losses in the market since july was way in excess of the losses possibly stemming from both the CDO's and Housing markets.

What you missed is that the sub-prime crap, aka 'toxic waste' was simply the underpinning for the inverted pyramid of ever proliferating financial derivatives that were piled on, one on top of the other. Especially when they were bundled together in mega-derivatives that were then blessed with ratings of 'AAA', since so many of them were included in any one bond that the failure of even the projected number would have had no noticeable affect. These then proliferated in the commercial paper (CP) market as ABS's, CDOs, ... etc. When it became apparent that the models of the projected failure rate of the crap (aka 'toxic waste' or equity tranches) did not provide for correlated events (like a housing appreciation slowdown or even recession), and consequently the projections were way too low— so that holders of these securities might eventually lose some REAL money— THE WHOLE INTERNATIONAL CP MARKET FROZE UP!

THAT was enough to bring nearly all international business to a near halt and MIGHTILY GOT THE ATTENTION OF THE CBers (nearly half a trillion dollars, world wide, was injected into the markets in a panic to try to unlock them— with only mixed success, so far)! In the end, it also brought down many perfectly legitimate mortgage lenders and even Too Big To Fail Northern Rock, the fifth-biggest lender in the UK:

The court of the Bank of England is understood to have met last night to approve the unprecedented support. Northern Rock is believed to be paying the Bank of England a penal rate of interest believed to be 6.75pc - a whole percentage point above base rate. "Customer deposits are safe," said a source to close to the Bank.

See: Subprime crisis

I have been watching this happen and have been expecting this outcome (eventually) for almost two years, as it was readily apparent that the credit market at half a QUADrillion dollars of derivatives was hopelessly and helplessly out of control. Every engineer knows what inevitably happens when you get an out of control, positive feedback system— the output increases parabolically until it goes vertical, THEN CRASHES.

Personally I havent seen any evidence at all of "half a quadrillion of derivatives was helplessly out of control", but thats just me.

Good trading.