Abstruse Goose: Fill it up with unregulated:

 

Abstruse Goose

Category: Derivatives, Humor, Regulation

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

13 Responses to “Fill ‘er Up — with Unregulated!”

  1. alekos says:

    Come on Barry, this is pandering to idiots. You’re better than this. Unless you really do think Greece had a functioning economy that was destroyed by a CDS vigilante conspiracy.

  2. Mike in Nola says:

    No, it’s pandering to common sense. Unless someone has a Greek bond or some similar Greek-dependent asset, they have no need to own a Greek CDS. Having no insurable interest leads to perverse incentives. The hero of the moment, Jamie, and his pal Lloyd are experts at this.

  3. alekos says:

    That’s like saying that airlines have no business owning oil futures because they don’t extract or refine it. Of course there are reasons to own CDS even if you don’t have direct exposure.

    And as for your perverse incentives…what about writing CDS? Surely if buying CDS without long exposure is bad, then so is writing CDS without being short?

    And what about perverse incentives? Does their existence mean that Greece was healthy but these “naked” CDS holders burned it down? Of course not. Greece had and has a Soviet-style economy, successive governments lied through their teeth about the country’s statistics, and they’re electing Communists and Fascists to fix the problem…but it’s the perverse incentives of a few CDS owners that led to this collapse.

  4. alekos says:

    That’s like saying that airlines have no business owning oil futures because they don’t extract or refine it. Of course there are reasons to own CDS even if you don’t have direct exposure.

    And as for your perverse incentives…what about writing CDS? Surely if buying CDS without long exposure is bad, then so is writing CDS without being short?

    And what about perverse incentives? Does their existence mean that Greece was healthy but these “naked” CDS holders burned it down? Of course not. Greece had and has a Soviet-style economy, successive governments lied through their teeth about the country’s statistics, and they’re electing Communists and Fascists to fix the problem…but it’s the perverse incentives of a few CDS owners that led to this collapse.

    I suggest you have a look at “Is there a case for banning short speculation in sovereign bond markets?” by Duffie (remember, before the evil CDS speculators with perverse incentives, we had evil shorters with perverse incentives), and “The European Sovereign CDS Market” by AIMA (and the numerous references contained within).

  5. Mike in Nola says:

    I think we all know from your few prior comments where you are coming from and that there is no reason to continue this discussion.

  6. ilsm says:

    CDS are bets, as is most of the street in Manhattan.

    Crassus, one of Caesar’s partners was the richest guy in Rome. He did many things, he ran a business with companies of fire fighters who happen to have been slaves, dirty dangerous low pay work. You could buy subscriptions and they would come out and put the fire out.

    If your house was on fire they would be like the cartoon above, only the subscription was a lot higher.

    Crassus was the richest guy in Rome.

    He went off to see about the Sassanides in the upper Tigrus valley and lost his head.

    Crassus could have worked in Manhattan. And he could have taken an army to Bagdad too.

    War on terrorists and all.

    Lots of gaming.

  7. AtlasRocked says:

    CDS’ should be illegal, big time illegal.

  8. SOP says:

    alekos,

    Airlines etc hedging on oil etc is not the same as helping the Greeks set up their fraud and using CDS to profit from it.

  9. SOP says:

    Key word of the day:

    unregulated – Adj. 1. not regulated; not subject to rule or discipline

  10. AtlasRocked says:

    Barry, The notion that conservatives want everything “unregulated”, I believe, is as much a strawman position as saying all on the left went totally centralized markets.

    As your proclaim to be a voice of objectivity and reason, wouldn’t it be more truthful and more balanced to refer to the opposing forces as “freer” market forces and “tightly regulated” forces? There are always forces of excess on both sides of every issue, and I see you, like so many other partisans on the left and right, refer to one side all lumped together as “unregulated” proponents, or the freer market partisan calls the liberal policy advocates “communists”. The right gets a strawman label indicating outlandish total lack of regulation, the left gets a label of oppression. The partisans see it as oppression versus freedom. Hogwash.

    If you have some surveys or data to indicate all conservatives want totally unregulated markets, I’d like to see it, but most every conservative I talk to are in favor of regulation that channels and harnesses normal human traits of profit seeking and working less and making more per hour; it is typically less, but not zero, regulation. The original Fed document was only like 30 pages long – that is a reasonable size for a conservative, freer market advocate. Outlawing CDS’s is just fine with us – they are gambling proposition, not an insurance instrument.

    The left wants regulations that thwarts normal human urges of greed and power, and just details in as many rules as necessary to thwart all the bad human excesses, however legal or deserved they may be, like too much profit or too much market share, or too much wealth. It is typically more, but not totally centralized control. Their ideas can require thousands of pages to capture and describe the amount of control they desire. Dodd-Franks is 800 pages, Obama care is over 2700 I believe. It is centralization market ideology, but not communism.

    Both sides are prone to allow cronyism and crime if it profits their constituency, but in general they both want to make outright theft, larceny, and embezzling illegal.

    So how about it, Mr. Nonpartisan: “tightly regulated” versus “freer” market advocates?

    Towards balanced debate and good gov’t,
    Atlas

  11. vachon says:

    Is it fraud if it’s legal?

  12. TripleSigma says:

    @alekos — good comments.

  13. Frwip says:

    @alekos – semi-daft comments

    Airlines buy a lot of fuel. A LOT. They have a clear, justified material interest in oil futures.

    CDS don’t explain Greece, I agree.

    But it explains some very interesting and lucrative shenanigans played by humanity’s good friends at GS and others with successive Greek governments to hide Greek public debt from the books (and from people who were not looking very hard, one must grant) then some other very interesting and lucrative shenanigans played by humanity’s good friends at GS and others against more recent Greek governments to profit from the mess they helped create in the first place.