This page contains a single entry from the blog posted on July 15, 2012 7:42 AM. The previous post in this blog was Nuke outrage, and a great quotation. The next post in this blog is More breaking news: Portland cops get away with murder. Many more can be found on the main index page or by looking through the archives.

E-mail, Feeds, 'n' Stuff

Sunday, July 15, 2012

Breaking news: Fraud in the futures industry

We're shocked at this, aren't you? We thought everything was on in the up-and-up with derivatives and "synthetic" securities.

Comments (8)

Doesn't the ide of carbon credits and "cap and trade" carbon futuIf you thought mortgage derivatives were risky bwyond prediction, you should be aghast at the idea of carbon trading.res just warm the very cockles of your heart?

I can explain this whole thing using David Beckham's spectacular, world-class 35-yard goal against the Timbers last night.

First, I hate having to learn about this economic stuff, but here goes: The futures market can serve a valuable purpose - for example, in protecting farmers against the uncertainties of crop yields.

Sure, this can lead to price speculation as a way to make money driving up a commodity's price, but the more noble purpose is to protect against a bad year in the fields, and keep the farmers going.

Futures are derivatives - and in fact rice futures were one of the first derivatives ever starting back in the 1700s in Japan.
These are what people are referring to when they say not all derivatives are bad. The key here is when the article says the "trillion dollar" futures market. That's a number that makes sense based on the size of the actual products it is talking about.

Where derivatives became catastrophically bad, was in these newer financial instruments that sliced and diced mortgages, with no regard for their worth, and then slapped a triple A rating on them and insured them over and over again for the sole purpose of generating big commissions and bonuses. These had no relation to any product. These boosted the size of our financial exposure to roughly ten times the economy of planet earth.

Those are the bad derivatives - the kind that are responsible for the 600 trillion dollar bubble - the weapons of mass financial destruction. They have no connection to reality as they could never be paid off should they fail.

What we have here with Peregrine Financial is a failure to regulate a basically sane market. At least there were regulators though, who were supposed to look at this, but they were fooled by forged paperwork and fake post office boxes. That's quaint.

This is an example of when regulation is good. We have been fed a constant stream of propaganda telling us to leave decisions about the air quality, etc...to private industry, because regulation is bad. But this is a clear example when regulation - if it had happened - would have been good.

Of course, the same GOP m*therf*uckers who have been screaming about regulation being bad, are also responsible for the fact that the bigger, nastier, newer, derivatives gambling casinos are not really regulated at all, but here, at least we had regulators. So how did they finally notice something wasn't right?

In this case, a simple switch to a more accurate, electronic form of regulation made it impossible for this Wasendorf clown to keep on faking his paper statements, and the fraud was immediately found out after the switch was made to better regulation.

Incidentally, it sounds like he started cheating on day one, twenty years ago, so even his talk about not facing the pressures of failure well, sort of failed. He was into this for 2 decades.

The tip-off here is that this Peregrine scandal amounts to a couple hundred dollars gone missing. Real dollars stolen. It's quaint. I'm not sure, but that sounds like the extent of the damages so far anyway. We're not in Jamie Dimon here with this moron.

What you'd expect from a derivatives loss, these days, is more of a bad bet leading to billions owed - billions that are not missing because they never existed. The "theft" occurs when the banks help themselves to the US Treasury and the future wealth of unborn children to cover their bets. Then seek ways to make any illegal activity, legal so they can keep doing it.

Another way you can tell this is from a more quaint, established form of derivatives, is that the guy is actually going to be prosecuted for this fraud, and spend time in prison, whereas the big firms like Goldman Sachs are not prosecuted for the gigantic fraud of the security swaps based on the housing bubble. They knew the triple A swap were fraudulently rated but they did not care - they were making a fortune in bonuses so why stop the music? What happens to them is they get fined - sort of like an overdue library book.

Nobody really close to this bigger derivatives market ever goes to jail for the biggest fraud in the history of the world, a fraud that's taken down Greece, and is munching its way through the global economy.

Otherwise, people like Henry Paulson would probably be in prison, which would mean Merritt would not own the Timbers, and that would mean the Timbers would not have given up 4 goals in 9 minutes to the LA Galaxy last night.

But that also means David Beckham would never have kicked that incredible goal. I really hope you saw it - it is your payoff for the derivatives scandal. Think of it as Henry Paulson writing you a dividend check - your cut from the biggest rip-off ever.

Or something like that.

Lets try that again with the keyboard cleaned.

Doesn't the idea of carbon credits and "cap and trade" carbon futures just warm the very cockles of your heart??

If you thought mortgage derivatives were risky beyond prediction, you should be aghast at the idea of carbon trading.

And by a couple of hundred dollars in my comment, I meant a couple of hundred million dollars.

Russell Wasendorf Sr was on the board of the regulation board that was supposed to be overseeing his company.

Never once did they actually look at the books - NEVER ONCE! They just took his word for it.

Meanwhile John Corzine, the guy that is tight with Obama and company did exactly the same thing - stole customer's money - and has walked away scot-free.

Both of these firms are linked at the hip with JP Morgan - old money never goes away, they just create front companies to take the hit.

A news report that ran this week says Iceland has some sort of bounty on criminal banksters, AND private investigators (like special prosecutors) may obtain licensing as civilian bounty hunters to apprehend the banksters and collect the reward.

hmmmm ... I wonder what the bounty on Karl Rove would be ....
Bounty hunting perhaps beats playing the lottery.

Bernie Madoff sat on the board of NASDAQ and a was a Vice-Chairman of the National Association of Securities Dealers, a forerunner of the current self-regulatory organization for Wall Street, FINRA.

This incident is pure theft. Instead of following though on client instructions, the broker misappropriated client funds to pay himself and other clients, and then lied about it.

There's a world of difference between theft and having a difference of opinion with a bunch of dim-witted accountants at the bond ratings agencies as to the value of diversification and the likely default and early repayment rates for sets of mortgages.

Clicky Web Analytics