Credit Default Swaps Against the Government

 

CNN

It’s one thing to bet against big banks on the the future of there mortgage backed securities, but it’s a totally different thing when it’s the loan obligations of the United States government. A credit default swap (CDS) is *basically* like shorting a stock – except instead of being a paper traded equity it’s a large pool of borrowed money. Should investors be allowed to short the United States Government? I don’t know, but now is probably your best time to do so.

CNN

JP Morgan Thinks it’s Special

CEO Jamie Dimon and other executives of the investment and commercial bank have been lobbying around Washington that new regulations for Wall Street are too strict. JP Morgan claims credibility in the issue of regulation because it was part of the solution to the financial crisis not part of the problem. Leavening most government officials, including Ben Bernanke (Brooklyn Steve’s personal hero), to say “Oh good for you, but you still have to play by the rules.”. While JP Morgan was not as problematic as others on Wall Street institutions there is no denying that they accepted government assistance in more than one form. This logic problem evokes Parmenides fallacy and the ability to compare two different end states of a given course of action. The truth is we cannot empirical for see the end result of a choice we didn’t make. Suppose JP Morgan would have survived the financial crisis because of its intrinsic risk management in the absences of government regulation, what of the other investment firms that did not have this foresight. Could JP Morgan have survived even if all others failed?

The Economist

Why Gold?

http://mariopiperni.com

I understand commodities, I really do. What I don’t understand is the fascination with investing in gold. By putting all your money into gold, you’re practically betting on the collapse of the world financial system. This, I believe, is why certain news and entertainment entities are constantly advertising it to you – to drive more fear into you. Trust me, if the world economy crashes tomorrow – you are safer NOT having a brick of gold stashed under your mattress.

WSJ

Regulating for the Sake of Regulating

High-frequency-trading
Google Images

High frequency traders catch a bad rap. Why? I certainly don’t know, and neither does Washington really. All the SEC knows, as well as other Washington regulators, is that these firms are profiting from something they cannot comprehend and therefore it must be illegal. Go ahead and read any newspaper article on the topic of high frequency trading, and you’ll see a slew of quotes from regulating officials that say something along the lines of “this practice *might* be causing instability in the markets” or “*may* be gaming the system.” How about some hard facts before you go a ruin a fair profit for these individuals!

NYTimes

More Stimulus!

Ben Bernanke
Ben Bernanke (or Paul Giamatti..)

Federal Reserve Chairman Ben Bernanke announced today that more money into the economy is still an option at this time, to improve economic conditions in the United States. Good luck convincing Speaker of the House John A. Boehner, who actually believes unemployment is at 9.1% BECAUSE of the original stimulus (seriously, check his Twitter feed, July 5th). Please show me some research that displays an instance where stimulus money actually increases unemployment. On second thought, why don’t you just go cry about it.

NYTimes