100 Year Crash: McCain advisor spurred $62 trillion derivatives market that will swamp global markets
Peter Cohan
Sep 15, 2008
http://www.bloggingstocks.com/2008/09/15/
100-year-crash-mccain-advisor-spurred-62-trillion-derivatives/
Lurking in the background of this weekend's collapse of two of Wall Street's biggest names, is a $62 trillion segment of the $450 trillion market for derivatives that grew huge thanks to John McCain's chief economic advisor, Phil "Americans are Whiners" Gramm. That's because in December 2000, Gramm, while a U.S. Senator, snuck in a 262-page amendment to a government re-authorization bill that created what is now the $62 trillion market for credit default swaps (CDSs).
Gramm's 262-page amendment, dubbed "The Commodity Futures Modernization Act," according to Texas Observer, freed financial institutions from oversight of their CDS transactions. "Prior to its passage, they say, banks underwrote mortgages and were responsible for the risks involved. Now, through the use of [CDSs]-which in theory insure the banks against bad debts-those risks are passed along to insurance companies and other investors," wrote Texas Observer.
How does this relate to Lehman's bankruptcy? "[CDSs] were a key factor in encouraging lenders to feel they could make loans without knowing the risks or whether the loan would be paid back. The Commodity Futures Modernization Act freed them of federal oversight," according to Texas Monthly. And it was due to these CDSs that Wall Street held an emergency session yesterday to try to minimize the damage of Lehman's CDSs and other derivatives. Unfortunately, this session did not produce much thanks to the built-in lack of knowledge of the risks in these transactions that Gramm's legislation ensured.
Internet Censorship Alert
Internet Censorship Alert: Alex Jones exposes agenda to 'blacklist' dissenting sites (March 14, 2010)
As I predicted, the Obama Administration is trying to shut down the Internet - at least the parts he doesn't like. Barack Obamas regulatory czar, Cass Sunstein has stated that he wants to ban conspiracy theories from the internet. Think about what this means - Every video, every website, every blog, every email, that exposes or just criticizes the government for any reason whatsoever could be labeled a "conspiracy" and taken down. Your home could be raided in the middle of the night, and you could be carted of to jail for criticizing the government. All they have to do is call it a "conspiracy theory".
http://www.youtube.com/watch?v=aqAWmBLFodE
Wednesday, September 17, 2008
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment