Financial Derivatives should be outlawed.

Quote from travfar : Insurance is gambling that if the worst happens, you're covered. If it best happens, you're still OK. Completely different. Also, insurance has explicit capitalization rules that insure that nothing catastrophic happens. Derivatives are the exact reverse, they are leveraged 10x/16x/? It's a disaster that's waiting to happen. Oh wait, it already did 4 years ago. Why are we still doing it? Didn't getting burned the first time teach us anything?

You're lumping a lot of financial instruments together, and I don't think they all deserve your ire.

Derivative financial instruments have been around for a very long time, and they're useful for hedging. Traditionally, they've been used to make sure that one bad season didn't sink an entire farming or shipping operation.

Is it derivatives, in general, that you're angry with, or just CDS's?

Quote from travfar : I was a bond holder in a company that went under. I just looked at the final payoff notice. I'm getting paid off 31.25 cents on the dollar. Far from full. At least I'm getting more than those schmucks that held Greeces debt.

Or more than those schmucks that held GM bonds a few years ago thanks to Obama

The problem was how did all those PUBLIC traded company hide all those debts and purchases from the shareholders...

The real problem was not the derivatives but how these "securities" was all traded "under the table" without full knowledge of the shareholders of these companies.
If the information was well disclose as per the law, for being a public traded company, I'm sure alot of this would of been stopped well in advance.

Its pretty hard to outlaw something, as criminals will just find something else to do... And Wall Street is a den of criminals... Even Al Capone knew a scam when he saw one..

This is what happens when a nation is dependent on the movement of money, instead of production.. People like to bash the poor for being unproductive, what about the rich who do nothing everyday but sit on a desk and make billions moving money ( especially MONEY THAT IS NOT THEIRS ) around, or worst yet CONJURING up money that they never had to begin with ( thanks to fractional reserves )

Its funny:
when I move other people's monies around I'm a money launderer

when publically traded companies move money around and debt around without full discloser to its shareholder as required by law, its not a big deal

Who's worst Bernie Madoff or ?

Quote from Ryu-bom : Who's worst Bernie Madoff or ?

I remember when Greenspan was second only to god. People would watch footage of him frame by frame just to get some insight by his body language. Now.... it's widely considered that the financial crysis was his making. Madoff was a bit player in comparison.

Quote from travfar : I remember when Greenspan was second only to god. People would watch footage of him frame by frame just to get some insight by his body language. Now.... it's widely considered that the financial crysis was his making. Madoff was a bit player in comparison.

Clinton and the GOP congress didn't help things in the late 90s by repealing glass-steagall

Quote from rrc06 : Clinton and the GOP congress didn't help things in the late 90s by repealing glass-steagall

No they didn't. We put we put in all these safeguards because of the depression. Then we removed them all over the decades. What happened, we repeated all the same old mistakes.

Derivatives Just "A Sophisticated Form Of Gambling," U.S. Senators Say; Propose Bill Allowing State Gambling Laws To Apply

Quote : "The derivatives market has done so much damage to our economy and is nothing more than a very high-stakes casino - except that casinos have to abide by regulations," wrote Cantwell. "Even in Las Vegas at the Blackjack tables, both the House and the player have to have capital behind their bets. But we allow Wall Street to continue to operate in the dark..." http://www.huffingtonpost.com/200...52994.html

Derivatives strike again. JPM $2 Billion dollar loss in just 6 weeks. Afterall we've been through, the banks have shown they can't reign in their own stupidity. "Stupid" is Jamie Dimon's word. It's time for regulation to be inacted to protect all of us. Personally, this stupidity on their part has already cost me a big chunk of change AH. It'll be a bloodbath tomorrow.

http://finance.yahoo.com/news/jpm...23911.html

Quote from travfar : Derivatives strike again. JPM $2 Billion dollar loss in just 6 weeks. Afterall we've been through, the banks have shown they can't reign in their own stupidity. "Stupid" is Jamie Dimon's word. It's time for regulation to be inacted to protect all of us. Personally, this stupidity on their part has already cost me a big chunk of change AH. It'll be a bloodbath tomorrow. http://finance.yahoo.com/news/jpm...23911.html

Yep. Let the shareholders take it on the chin for this crap

The Same Old Wall Street.. Too big to fail? The big banks are bigger and more powerful than ever..

Quote : JPMorgan Trading Loss Suggests Little Has Changed Since The Financial Crisis If you thought Wall Street had learned its lesson four years after the global financial crisis, JPMorgan Chase's $2 billion trading debacle suggests you should think again. JPMorgan revealed on Thursday that it had lost about $2 billion (with possibly more losses to come) from risky bets on opaque derivatives at a London trading desk. http://www.huffingtonpost.com/201...10217.html

$2B doesn't seem like much for JPMorgan to announce the loss in this manner unless the chief executive douche is trying to get ahead of the risky semi-illegal shit they are used to pulling.

Smaller investment banks can have free reign where the shareholders take the hit but TBTF = strict regulation so we don't get the market's invisible fist up our collective asses again.

Quote from travfar : Derivatives strike again. JPM $2 Billion dollar loss in just 6 weeks. Afterall we've been through, the banks have shown they can't reign in their own stupidity. "Stupid" is Jamie Dimon's word. It's time for regulation to be inacted to protect all of us. Personally, this stupidity on their part has already cost me a big chunk of change AH. It'll be a bloodbath tomorrow. http://finance.yahoo.com/news/jpm...23911.html

There's that buzzword again -- derivatives. What JPM was investing in wasn't illegal or even unethical. The instruments, themselves, weren't even extremely risky. In fact, it would have been far more risky for JPM to hold the bonds that they held without taking a hedging position. What Iksil did initially is establish opposing positions, which ensured that he would neither realize very large gains, nor suffer very large losses.

There were two problems, though. Iksil thought he had found the perfect hedge (and maybe a potentially lucrative speculative investment), so he poured enormous sums of money into the CDX.NA.IG.9 index, possibly forgetting that diversity is a valuable component of a true investment strategy.

The second problem was specifically with the amount of money invested in this one index by Iksil. He established a large enough position in the index that he distorted the market, literally altering price and demand calculations, single-handedly. This alerted other investors to his actions and allowed them to exploit his out-sized position when the index marked to market.

http://www.nytimes.com/interactiv...fired.html

Quote from burninator : There's that buzzword again -- derivatives. What JPM was investing in wasn't illegal or even unethical. The instruments, themselves, weren't even extremely risky. In fact, it would have been far more risky for JPM to hold the bonds that they held without taking a hedging position. What Iksil did initially is establish opposing positions, which ensured that he would neither realize very large gains, nor suffer very large losses. There were two problems, though. Iksil thought he had found the perfect hedge (and maybe a potentially lucrative speculative investment), so he poured enormous sums of money into the CDX.NA.IG.9 index, possibly forgetting that diversity is a valuable component of a true investment strategy. The second problem was specifically with the amount of money invested in this one index by Iksil. He established a large enough position in the index that he distorted the market, literally altering price and demand calculations, single-handedly. This alerted other investors to his actions and allowed them to exploit his out-sized position when the index marked to market. http://www.nytimes.com/interactiv...fired.html

That's all fin and dandy but this is straight from the horses mouth:

Quote : http://www.reuters.com/article/20...7A20120513 Dimon said bank executives were "completely wrong" in public statements they made in April after being challenged over the trades in media reports. "We got very defensive. And people started justifying everything we did," Dimon said. "We told you something that was completely wrong a mere four weeks ago."

From what I have read so far, the purpose of the CIO group that was responsible for this fark up was risk management. Their job is not to make profit but to mitigate risks, correct? The irony is too much.