The Derivatives Beast Is Breaking Up The Banks

[Joanne98]

Elaine Meinel Supkis


Credit-Default Swaps Move Closer to Regulation With N.Y. Plan

(Bloomberg) -- New York State's proposal to start regulating part of the credit-default swaps market may accelerate oversight of an industry blamed for helping to almost bring down the U.S. financial system.

New York Governor David Paterson said in a statement yesterday that the state will consider contracts sold to investors who own bonds they are trying to protect from default as insurance. The plan won't apply to contracts purchased by speculators who only want to bet on an increase or decrease in a borrower's creditworthiness and don't own bonds.

Calls for greater regulation of the $62 trillion market have grown after the U.S. had to take over American International Group Inc. and provide the New York-based insurer with an $85 billion loan to cover obligations at a unit that sold protection on securities through the credit-default swap market. The AIG subsidiary was required to post collateral against more than $400 billion of contracts after its credit rating was downgraded.




All over the news, they are FINALLY admitting that the Derivatives Beast and especially the Credit Default Swap part of it, is now rapidly destroying the entire banking system.


At least, Bloomberg News is talking about it. Patterson, the Governor of NY, is going to force all swaps to be run under NY insurance laws. This will KILL THE BEAST. There is now high hysteria in the remaining sectors of the CDS community. I say, just as investment bankers who are really gnomes playing pirate, just surrendered, now, everything is going to surrender. Only this will NOT fix the banking mess.


We have to tackle the Bank of Japan's 0% interest scam as well as the US Congress overspending money. Oil ran up a record amount yesterday and so did gold. Inflation is flying high again and will hammer us.


This is all very ridiculous and I will hope to find information in DC since we are now officially in the HOT CENTER of the banking collapse. Not the end or the end of the middle. We are at the beginning of the middle.


Good luck to everyone, I am now going offline for 12 hours or more! See you all later.


And thanks a million to all the kind readers who sent donations! I love you all!!!!

http://elainemeinelsupkis.typepad.com/money_matters/2008/09/the-derivatives.html

[dkf]

1. Won't this increase the need for capital further?

[westerebus]

2. 1994

The folks who had a contract with America and a President who did not know the definition of "is" is, placed into law an exemption from regulation for the OTC Derivatives market. And nobody in the hearings wants to talk about what they know will blow up within the next year. The scam continues.

[Mojorabbit]

3. I am really worried.

I can't decide just what to do with what little I have put away.