Lifestyle > Train of Thought
LOL @ Obama insisting that banks now extend more credit to "mainstreet"
illwill:
--- Quote from: Infinite... Be and It Is on December 23, 2009, 09:51:08 AM ---
--- Quote from: virtuoso on December 23, 2009, 04:22:46 AM ---
Basically the glass steagalz act of 1933 was introduced to seperate commercial banking from investment banking. When the act was repealed by George Clinton it allowed the commercial banks to commence their activities as speculators. So what do I mean by a derivative? well it's a bet placed on a futures market, but not a fixed bet, i.e. think of spread betting, but spread betting which allows you to leverage 1 to 50, 1 to 60, 1 to 70. So as the money expansion increased, lets say people were placing spread bets on house prices, the money expansion allowed the prices to keep on increasing and so those financial institutions who had made their bets, could then sell those derivative bets on to someone else who would be happy to do so because they were only seeing their investments grow. So this rampant speculation, creates an artificial demand in the markets pushing the price higher and higher, however such a bubble will eventually implode simply because it's creating more and more money out of thin air and relies upon the ability of the consumer to still buy it. So when they announced a credit crunch, they pulled the rug on these gambling games, which immediately led to cries of the banks needing bailouts, so essentially what you have here, is they take our money and become a casino with it and when they lose, they can take more of our money to cover their losses. The reality is most of these banks have very little in the way of hard capital, the derivatives contracts, are essentially paper based because there is no actual real world economic activity to back them up.
So in layman's terms, the bank must capitalise itself a a ratio of 1 to 10 usually, but in derivatives, you could end up multiply that number by another 20 fold, we don't even know what the actual value of the derivatives market is anymore, best guesses put it in the quadrillions, but no one knows just what figures we are looking at, because a record does not have to be kept of every derivative transaction. This is why the money taken by the banks of our money, the endless liquidity has gone to repair their balance sheet, hence the reason it's had no tangible effect or positive effect on the economy.
--- End quote ---
I still don't really understand. So are you saying that like I buy a house today for 100,000 dollars. Then these people bet or speculate that that house will be worth 200,000 by 2012. So then some idiot goes off of their bullshit speculation and buys the house for 170,000 and thinks he's getting a deal, when in reality the value of the house didn't go up? And they make money off of that somehow? Don't really get it.
--- End quote ---
Actually the creation of artifical wealth goes back to Reagan. Clinton repealing the glass stengall act certainly didn't help any. But the false creation of wealth while wages remained relativly stagnet traces back to Reagan. But idiots like Mr.Tin Foil watch out for shape shifting lizards virtuoso believe it was all Clintons fault with repealing that glass stengall act.
And stop sending me PM's asking for black on white porn, Brian.
virtuoso:
--- Quote from: Rape isn't a crime if shes unconscious on December 23, 2009, 12:01:56 PM ---
--- Quote from: Infinite... Be and It Is on December 23, 2009, 09:51:08 AM ---
--- Quote from: virtuoso on December 23, 2009, 04:22:46 AM ---
Basically the glass steagalz act of 1933 was introduced to seperate commercial banking from investment banking. When the act was repealed by George Clinton it allowed the commercial banks to commence their activities as speculators. So what do I mean by a derivative? well it's a bet placed on a futures market, but not a fixed bet, i.e. think of spread betting, but spread betting which allows you to leverage 1 to 50, 1 to 60, 1 to 70. So as the money expansion increased, lets say people were placing spread bets on house prices, the money expansion allowed the prices to keep on increasing and so those financial institutions who had made their bets, could then sell those derivative bets on to someone else who would be happy to do so because they were only seeing their investments grow. So this rampant speculation, creates an artificial demand in the markets pushing the price higher and higher, however such a bubble will eventually implode simply because it's creating more and more money out of thin air and relies upon the ability of the consumer to still buy it. So when they announced a credit crunch, they pulled the rug on these gambling games, which immediately led to cries of the banks needing bailouts, so essentially what you have here, is they take our money and become a casino with it and when they lose, they can take more of our money to cover their losses. The reality is most of these banks have very little in the way of hard capital, the derivatives contracts, are essentially paper based because there is no actual real world economic activity to back them up.
So in layman's terms, the bank must capitalise itself a a ratio of 1 to 10 usually, but in derivatives, you could end up multiply that number by another 20 fold, we don't even know what the actual value of the derivatives market is anymore, best guesses put it in the quadrillions, but no one knows just what figures we are looking at, because a record does not have to be kept of every derivative transaction. This is why the money taken by the banks of our money, the endless liquidity has gone to repair their balance sheet, hence the reason it's had no tangible effect or positive effect on the economy.
--- End quote ---
I still don't really understand. So are you saying that like I buy a house today for 100,000 dollars. Then these people bet or speculate that that house will be worth 200,000 by 2012. So then some idiot goes off of their bullshit speculation and buys the house for 170,000 and thinks he's getting a deal, when in reality the value of the house didn't go up? And they make money off of that somehow? Don't really get it.
--- End quote ---
Actually the creation of artifical wealth goes back to Reagan. Clinton repealing the glass stengall act certainly didn't help any. But the false creation of wealth while wages remained relativly stagnet traces back to Reagan. But idiots like Mr.Tin Foil watch out for shape shifting lizards virtuoso believe it was all Clintons fault with repealing that glass stengall act.
And stop sending me PM's asking for black on white porn, Brian.
--- End quote ---
Lol Bill Clinton even, I never said that artificial wealth creation started with the glass steagalz act, that in itself is something which happened as a product of an expanding money supply so your efforts to downplay what I have said have fallen flat on their face. However once they repealed the glass steagalz act, they allowed the commercial banks to start utilising "investment instruments" and is that which has made the situation get out of control.
virtuoso:
--- Quote from: Infinite... Be and It Is on December 23, 2009, 09:51:08 AM ---
--- Quote from: virtuoso on December 23, 2009, 04:22:46 AM ---
Basically the glass steagalz act of 1933 was introduced to seperate commercial banking from investment banking. When the act was repealed by George Clinton it allowed the commercial banks to commence their activities as speculators. So what do I mean by a derivative? well it's a bet placed on a futures market, but not a fixed bet, i.e. think of spread betting, but spread betting which allows you to leverage 1 to 50, 1 to 60, 1 to 70. So as the money expansion increased, lets say people were placing spread bets on house prices, the money expansion allowed the prices to keep on increasing and so those financial institutions who had made their bets, could then sell those derivative bets on to someone else who would be happy to do so because they were only seeing their investments grow. So this rampant speculation, creates an artificial demand in the markets pushing the price higher and higher, however such a bubble will eventually implode simply because it's creating more and more money out of thin air and relies upon the ability of the consumer to still buy it. So when they announced a credit crunch, they pulled the rug on these gambling games, which immediately led to cries of the banks needing bailouts, so essentially what you have here, is they take our money and become a casino with it and when they lose, they can take more of our money to cover their losses. The reality is most of these banks have very little in the way of hard capital, the derivatives contracts, are essentially paper based because there is no actual real world economic activity to back them up.
So in layman's terms, the bank must capitalise itself a a ratio of 1 to 10 usually, but in derivatives, you could end up multiply that number by another 20 fold, we don't even know what the actual value of the derivatives market is anymore, best guesses put it in the quadrillions, but no one knows just what figures we are looking at, because a record does not have to be kept of every derivative transaction. This is why the money taken by the banks of our money, the endless liquidity has gone to repair their balance sheet, hence the reason it's had no tangible effect or positive effect on the economy.
--- End quote ---
I still don't really understand. So are you saying that like I buy a house today for 100,000 dollars. Then these people bet or speculate that that house will be worth 200,000 by 2012. So then some idiot goes off of their bullshit speculation and buys the house for 170,000 and thinks he's getting a deal, when in reality the value of the house didn't go up? And they make money off of that somehow? Don't really get it.
--- End quote ---
Essentially house prices were being driven up by speculation, which has been creating a weight of money issue, in which there was so much money being bet for house prices rising, that it created an artificial demand, which pushed house prices further and further upwards. How were they able to make money off it? buy low, sell high, or indeed selling on the derivative contracts to another financial institution who at the height of the bubble could in turn then sell it to someone else and someone else and so on. The problem is it the commercial banks who got caught up derivatives to such an extent that it became their primary source of income and due to the ratios from which they were then able to leverage out, it has just become a way of acquiring while really having very little in the way of capital. The derivatives market is completely out of control as is illustrated by the quadrillion plus worth of the market.
So when the market reaches a critical point at which homes become unattainable for most people, then the market employs a massive correction which signals a huge fall in prices as so much of the value of the homes was driven artificially.
TraceOneInfinite:
--- Quote from: Rape isn't a crime if shes unconscious on December 23, 2009, 12:01:56 PM ---
And stop sending me PM's asking for black on white porn, Brian.
--- End quote ---
I actually never watch porn of any kind, and would never make an effort to communicate with you about anything. Your the type of person I only speak to when I have to.
illwill:
--- Quote from: Infinite... Be and It Is on December 23, 2009, 02:53:25 PM ---
--- Quote from: Rape isn't a crime if shes unconscious on December 23, 2009, 12:01:56 PM ---
And stop sending me PM's asking for black on white porn, Brian.
--- End quote ---
I actually never watch porn of any kind, and would never make an effort to communicate with you about anything. Your the type of person I only speak to when I have to.
--- End quote ---
Type of person ? You mean black people. Keep that racist shit to yourself fucking devil.
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