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Bonds Are a 'Safe' Investment: A Big Lie Gets Even BiggerWhy is it that bankers will not come to grips with the fact the derivatives are destructive and have taken this economy down and turned it to ruin? Toxic assets are derivatives and we are throwing about $3 trillion of taxpayer money into this black hole.
Instead they are stubbornly holding on to derivatives and playing mickey mouse with a few changes. Listen to this one: -- 1400 banks and asset managers are adopting a new "big bang" protocol to make it easier to know what will happen in the case of defaults. What in the world do they think they are doing -- creating a new universe? This just a sugar coating. Also, the US market will introduce a standardized pricing for CDS contracts which hitherto have been unregulated. The CDS market is not the main culprit. The main culprits are the CDOs and CLO's and the banks don't have a "big bang" for these derivatives.
Here is another whopper. The Tri Optima, a trade processing group, said it has removed $5.5 trillion of redundant contracts from the market in the first 3 months of the year. Let me say that again --$5.5 trillion has simply evaporated.
If the banking sector wants the world to believe they are cleaning up their act, this "big bang" act is just that an act. Why not just admit that derivatives are destructive and caused the current economic crisis and simply abolish them and go back to traditional banking methods.
Here is another reason why this is just sugar coating. No one, not the Administration, the Federal Reserve nor the Congress have what it takes to pass a law forcing banks to put ALL their trades "on the books" and end once and for all this hidden shadow banking that Meredith Whitney talks about.
And finally, send all the banking lobbyists back into their fox holes.
What are your impressions of the "big bang" protocol?
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