Showing posts with label Derivatives. Show all posts
Showing posts with label Derivatives. Show all posts
Tuesday, April 20, 2010
I'm shocked...SHOCKED to find that gambling is going on in here
Roger Lowenstein's op-ed for NYT yesterday advocates for: 1) trading derivatives on exchanges and in standard contracts; and 2) banning or at least regulating credit default swaps. These seem like eminently reasonable suggestions.
Wednesday, June 03, 2009
Byron Dorgan: Hero
Byron Dorgan, Republican [Update: Nope. He's a Dem. Thanks Scooter for catching that.] Senator from North Dakota, presciently warned about the dangers of repealing the Glass-Steagall Act in 1999:
As I may have mentioned before, there was bipartisan support for the repeal:
Senator Dorgan now has published a book about the financial crisis that I haven't read yet.
I think we will look back in 10 years' time and say we should not have done this but we did because we forgot the lessons of the past, and that that which is true in the 1930's is true in 2010,'' said Senator Byron L. Dorgan, Democrat of North Dakota.This article also gives an honorable mention to Minnesota's Paul Wellstone, may he rest in peace, for opposing the repeal.
As I may have mentioned before, there was bipartisan support for the repeal:
One Republican Senator, Richard C. Shelby of Alabama, voted against the legislation. He was joined by seven Democrats: Barbara Boxer of California, Richard H. Bryan of Nevada, Russell D. Feingold of Wisconsin, Tom Harkin of Iowa, Barbara A. Mikulski of Maryland, Mr. Dorgan and Mr. Wellstone.
In the House, 155 Democrats and 207 Republicans voted for the measure, while 51 Democrats, 5 Republicans and 1 independent opposed it. Fifteen members did not vote.
Senator Dorgan now has published a book about the financial crisis that I haven't read yet.
Tuesday, March 17, 2009
Short-selling, credit default swaps and zero-sum gambling
Samantha Bee last night on the Daily Show shines a light on short selling:
Anyone want to tell me how/why short-selling is allowed? I've heard a defense of it as a mechanism for properly pricing stock, but it didn't make sense to me. Why can't potential buyers just look at the P/E ratios and other company fundamentals to decide what price they're willing to pay for a stock?
The short-selling is just another version of gambling, like the credit default swaps. This kind of gambling is zero-sum, isn't it? For someone to make money, someone else has to lose money, as far as I can tell. If I have that right, then that's what makes these vehicles different in kind from regular old ownership of a share of stock in a company. Sure, it's a gamble to own stock, in the sense that it could lose some or all of its value, but no one need lose any money for your stock to go up in value.
Anyone want to tell me how/why short-selling is allowed? I've heard a defense of it as a mechanism for properly pricing stock, but it didn't make sense to me. Why can't potential buyers just look at the P/E ratios and other company fundamentals to decide what price they're willing to pay for a stock?
The short-selling is just another version of gambling, like the credit default swaps. This kind of gambling is zero-sum, isn't it? For someone to make money, someone else has to lose money, as far as I can tell. If I have that right, then that's what makes these vehicles different in kind from regular old ownership of a share of stock in a company. Sure, it's a gamble to own stock, in the sense that it could lose some or all of its value, but no one need lose any money for your stock to go up in value.
Re: Dionne on Leuchtenburg
VDH had a similar thought yesterday (or over the weekend):
2) The Meltdown Commission. We had a 9/11 Commission; we formed the Baker-Hamilton Commission on Iraq (never mind the utility of the conclusions). So let us try a bipartisan investigatory commission on the autumn financial meltdown. Thus far the mainstream media narrative is a reductive “Bush did it.” But let us examine past bundling of subprime mortgages, and derivatives, and who introduced more regulation of banks, who opposed it; who tried to restrain Freddie and Fannie, who fought that tooth and nail, what the SEC did and did not do—and why. Let us collate all the campaign contributions from the failed banks, Madoff, the entire open sewer of politics and high finance, and then let those of the commission, both Democrat and Republican, issue a white paper on when, why, and how it all went down.
2) The Meltdown Commission. We had a 9/11 Commission; we formed the Baker-Hamilton Commission on Iraq (never mind the utility of the conclusions). So let us try a bipartisan investigatory commission on the autumn financial meltdown. Thus far the mainstream media narrative is a reductive “Bush did it.” But let us examine past bundling of subprime mortgages, and derivatives, and who introduced more regulation of banks, who opposed it; who tried to restrain Freddie and Fannie, who fought that tooth and nail, what the SEC did and did not do—and why. Let us collate all the campaign contributions from the failed banks, Madoff, the entire open sewer of politics and high finance, and then let those of the commission, both Democrat and Republican, issue a white paper on when, why, and how it all went down.
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