April 02, 2010
– Comments (10)
Pass it on.
May Greenspan get his...
This doesn't surprise me
I have not talked about this, but when I realised there were these derivative things I was enrolled in a master's program, one that was making me feel like barfing for the lack of understanding of what a classroom is like by the so call experts empowered to decide at what was important for a classroom. Getting a better understanding of derivatives because of their potential to destroy that which people have built became a priority for me and I dropped out of the master program.
But get this about the master program, I had a course with 18 motivated adult learners who had all made it through at least one degree and many already had two degrees and this course had not one instructor but two. That kind of waste and arrogance of people in adminstering an education program screams of gross mismangement and waste of taxpayer's money.
I have had a teaching load of up to 247 teenagers and there is no way you can possibly have an ounce of credibilty with me about education if you can't figure out how to teach an adult course on your own. And not a single thing this so called experts introduced would be useful in a classroom. Every single program they introduced was administered with 1 or 2 extra trained people that were there to administer the program. Sorry, but teachers have to teach this stuff on their own and if a program can't be given to a teacher and successfully implemented by the teacher alone it is simply for the trash. I have a chip on my shoulder that simply gives no respect to Ph.D's that come up with that kind of garbage. They jumped through hoops to get where they are, but they failed miserably in understanding the big picture and I think this is where a lot of people have issues with higher education. So what, you have upteen degrees, you still can't think.
Anyway, what I learned independently and how I applied what I learned with the priorities I chose I got further ahead in 15 months then what the master's program would have done for me for the rest of my life.
These derivates still scare me in how they still have the power to wipe out a lifetime of savings.
Undrestanding Derivative Markets HMMM.
August 22, 2009 – Comments (5) | RELATED TICKERS: ALE , ING A short amusing peek into how it works. 2 min read. Imagine insuring this sillyness and you understand CDS and "all fall down"Thanks dwot, +1 rec.
Wow, just wow... I'm glad it's friday b/c I need a drink after watching that!
That is definitely a must watch video, I'm so glad this info is finally getting out there and hopefully becoming mainsteam.
I realize hindsight is 20/20, but holy geez what in the hell were people thinking? Let's get something clear, Greenspan was in favor of deregulation and free-market principles (which I largely like) however, he was essentially against the most important part of any free-market system, failure! You can't have it both ways Greenspan you idiot!
This video brings up several important points:
1) We have on tape, Summers, Geithner, Greenspan, Rubin, etc. (not to mention practically the entire congerss) saying that the financial markets are completely perfect, no need for regulation, etc. Yet, we peoved them wrong in 1998 and 2008/09. So this begs the question, why do we still listen to them? More importantly, why in the world do they arguably have more power now then they did before they were blatently proven wrong. Honestly people, we really want them heading up Obama'a econonic team? Really? Can I have some of whatever drugs you are on? Purty please???
I'm not saying people can't make mistakes, but think about it. If you scrweed up this bad in your profession for over 10-20 yrs., you would be canned in an instant with little hope of every returning to that sector ever again. Why do we terat these economists differently?
2) We still aren't going to regulate derivatives? Really? Like really really? Again, what the hell are people thinking. We either, A) regulate derivatives, or B) let banks/hedge funds/etc. fail when that garbage blows up in their face. We CANNOT continue to let them have an unregulated system and be there at a moments notice to bail them out when needed. They simply can't have it both ways kiddos.
3) There are still very serious dangers in our economy lurking close by in the shadows of our collective arrogance. Have we learned nothing from this calamity? Are we really going to let the recent meteoric rise in the stock market trick us into forgetting how bad things can quickly become? Is everything all back to sunshine and lollipops?
Nevemind the fact that the derivatives market has grown if anything and remains a complete blackhole with NO transparency. Nevermind the fact that the average American (read, vast majority) got pummeled the last few yrs. and were entirely ABSENT from the recent stock market surge the last yr. Yes, many Fools made a killing this past year, I certainly came off smelling like roses, but we forget all too often that the average Joe, A) doesn't own stocks and/or B) pulled their money out, and kept it out, during the ~70% market rise. Nevermind ~10% unemployment, oh excuse me, 9.7 as of this am. So ya, everything is gerat!
I'm not calling for the end of the world, far from it. It just really annoys me how short sighted/stupid/arrogant we as a society have become/are. I guess I just would have liked us to come together and take actions to prevent/limit future potential risks.
I guess there is no need to think about our past mistakes, afterall, learning from history is so last century!
Awesome video Dwot, thanks for posting and ejoy your weekend!
#2 from above says it all for me. We can legislate, make more rules..... but we can't legislate euphoria and stupidity (just my opinion).
As a stupid person, I am guilty of this stupidity when I bought my first house. I had more than a 100 pages to read and sign (legislation), but do you think I was going to understand what I was signing? No, so legislation only can get you so far and it certainly makes lawyers richer :)
Allowing people to fail is the key! I really didn't see companies fail evenly and those of the protected class were left standing in 2000 and 2009. If collusion of the central bankers and administrations determine who fails then how do we really have free enterprise? AIG was a protected class; Lehman and Washington Mutual (another stupid decision of mine) were not.
No, we can not legislate against stupidity, but we can legislate sound lending and insurance practices that don't completely set up the client as the mark.
I have been a part of 4 housing booms and busts now and I lacked experience to understand what was happening through the first 3. We can and should protect people against themselves as far as housing is concerned. The cost of not doing do is just too great in spill over costs.
The standard of lending based on interest rates is absurd and does not serve the greater good. The standard for lending should be no more then 30% of your income to pay for a home over 20 years at 8% with a bit of fudging room based on individual circumstance. There should be a bit of room for increasing the amount one qualifies for as rates decline, but if you really study the issue, it is insane to allow to borrow up to a percent of income at the going low rate as the ability to pay off that debt early becomes impossible.
Our economy is only strong when people are empowered to better themselves and that policy is simply a form of debt slavery. With high rates a 10% increase in payment wipes years off the debt repayment. With low rates the effect is utterly marginal. That inability to get that money doing other things in the economy totally stagnates the economy.
This 30 year mortgage grew out of disaster and how to make it so debts could be repaid. To have it as a standard leaves no buffer to deal with disaster, which is what we now have.
And it allowed massive transfer of wealth from the middle class and the poor to the wealthy. That money doesn't circulate in the economy the way it would divided into the hands of many. It sits trying to extract even more out of the many.
Regulation could have prevented the mess we are in and it could have made the short falls in pensions obvious years earlier when there would have been more time to correct it. There is no way to make pensions pay what people believe they are entitled to, but without the rubbish of the last more then 2 decades benefits would not have continued to increase to the grossly unsustainable levels and people's belief systems would have been forced into more realistic outcomes. Instead we have a society built on false beliefs and bringing things back in line with what is sustainable is going to be incredibly challenging.
"Our economy is only strong when people are empowered to better themselves and that policy is simply a form of debt slavery"
"bringing things back in line with what is sustainable is going to be incredibly challenging"
Sounds like we need to empower those willing to be challenged and rise to the occasion so there isn't a small % of those 'ahead of the curve' that can disrupt regulatory compliance because they are ahead of the ones designing and signing into law the regulations...the world is changing...big time...information sharing real-time around the globe is no joke...why do you think China and Google is an issue...you really think it has to do with strictly monetary issues?? (That is part of it, don't be naive...)
Greenspan says no regulation to keep people from making dumb mistakes...sooooo...who decides the dumb from the smart and is the smart really only 2% of the population and/or 98% in control of mainstream cash???
Did that mean that Greenspan was the ultimate genius of all financial happenings and market behavior (including the rational market assumption) --- I don't think he had a psychology degree did he???
Hahaha, the markets are like 'an Alice in Wonderland of profits' ... and then ... BUST!!! What happened, is it good to know history...and learn from the past...and redefine who some of the 'experts' are maybe ... Just saying, think about it....
And I passed it on ... Facebook , haha ...