Indeed, the opaque, unregulated, OTC derivatives are indeed the Dog
and the sub-prime mortgages are only the Tail-of-the-Dog,
we are being duped by the big money players & the several financial houses
that the tail-is-wagging-the-dog...out right lie!
letting market forces take out a few members of the money cartel,
among them are JP Morgan Chase & Goldman Sachs,
is the only way to go...
Originally posted by Mercenary2007
there is only 2 ways out of this mess. [...]
the first way is every financial institution needs to open there books so we can see just how bad off they may be and let everything come crashing
down afterwards and start over.
the second way is for every government to agree to wipe everyones slate clean. clear out everyones debt from the bottom up.
the poster has good points,
but the 'opening' of the books, would be a non-starter because there are
many, many, really profitable
derivatives mixed in among the bad paper...
And that is the reason the big banks & big insurance are dragging their heels in being forthcoming on their 'Level 3' assets
[assets the 'poor' banks have not traded or swapped with the Fed,
even though the Fed has many programs to swap, buy, or hold these assets in exchange for cash...for up to 9 months... there are several
'windows' or other newly created 'facilities' created in recent months for the purpose of unclogging the big-banks balance sheets...which the
banks refuse to use to the full extent !
] ?Why... because it
would reveal their real financial condition...flush & swamped with potential monster pay-outs owed them !
The really big banks, insurers have multi trillions in these hidden assets/liabilities but will not have the public see & inspect this 'paper'
Or in any degree part-with this paper because of the profits they might sometime realize from this 'paper'
These same major institutions are feigning reluctance into receiving bailout
money from the Fed/Treas...but as we have already seen, they are quickly taking the cash & buying foreign banks or funding $23billion in the Pfeiser
takeover of Wyeth pharmaceuticals.
the 2nd point: wiping the slate clean
the USA is now proposing a 'bad bank' which would hold the paper &
derivatives, and the owners coulld in the future buy-back the presently toxic paper... the average Joe is not afforded this type of luxury.
In both cases, neither will work, because the banker class are intent on hiding their portfilos, because once the unwinding is done and the big banks
had already went through the $4-8Trillion in bailouts handed to them....
we will all be shocked & amazed that the big banks have Trillions in
derivatives that are now worthwhile (after the crises is over) and will by law be required to be paid to the big-betting-banks.