Custom Search

Friday, October 3, 2008

Leverage: What Could Possibly Go Wrong?

“We’ve said these are the big guys but that means if anything goes wrong, it’s going to be an awfully big mess.” -Harvey J. Goldschmid, authority on securities law

“I’m very happy to support it and I keep my fingers crossed for the future.” -Commissioner Roel C. Campos

I yelled at my computer screen after reading this.

I don’t even know what to say.

The lone dissenter was a software consultant. Poor bastard was the only voice of reason. He probably got absolutely destroyed by the big five after this for daring to dissent.

Agency’s ’04 Rule Let Banks Pile Up New Debt, and Risk: “Many events in Washington, on Wall Street and elsewhere around the country have led to what has been called the most serious financial crisis since the 1930s. But decisions made at a brief meeting on April 28, 2004, explain why the problems could spin out of control. The agency’s failure to follow through on those decisions also explains why Washington regulators did not see what was coming.

On that bright spring afternoon, the five members of the Securities and Exchange Commission met in a basement hearing room to consider an urgent plea by the big investment banks.

They wanted an exemption for their brokerage units from an old regulation that limited the amount of debt they could take on. The exemption would unshackle billions of dollars held in reserve as a cushion against losses on their investments. Those funds could then flow up to the parent company, enabling it to invest in the fast-growing but opaque world of mortgage-backed securities; credit derivatives, a form of insurance for bond holders; and other exotic instruments.

The five investment banks led the charge, including Goldman Sachs, which was headed by Henry M. Paulson Jr. Two years later, he left to become Treasury secretary.

A lone dissenter — a software consultant and expert on risk management — weighed in from Indiana with a two-page letter to warn the commission that the move was a grave mistake. He never heard back from Washington.

One commissioner, Harvey J. Goldschmid, questioned the staff about the consequences of the proposed exemption. It would only be available for the largest firms, he was reassuringly told — those with assets greater than $5 billion.”

Brilliant. We will only let the largest and most important firms leverage up like this so we can absolutely concentrate the risk in the most critical parts of the financial system.

What could possibly go wrong?

19 comments:

guillermo said...

Ben, i read your posts were you say that this could be like a sencond Japan, but global. But the liquidity that was send to the banks there, flew away with the carry trade(that could explain deflation and depression). But where would money could go now?

peterthepainter said...

they aint no money. there was credit...now there's debt...

dougiefreshhh said...

Good one Ben.

So glad I have been following you for the past 6 months.

Didn't want to believe it myself, but pulled into cash last spring.

So would any energy play be good for the short term. Husky Energy (in your neck of the woods) seems interesting.

xcomp said...

I like to call Ben "my favorite bear".

Your blog is a valuable resource, and keeps me grounded (even though sometimes I think you're a little off your rocker). That said...you really think they commodities are close to a bottom? I'm contemplating whether to stay short on oil for a while and target a price of $80 at the max.

Perplexo said...

You know I honestly think these matters are laugh-out-loud funny.
They begged & pleaded for more rope, and then promptly (four years is what? not fifteen-hundred days?) hung themselves with it.
Ha! Ha! Ha! These guys should have been paying more attention to the nursery rhymes they heard in their childhood....

replica rolex said...

$75 Replica Rolex Watches sale, Our site provides Rolex replica, replica Rolex Watches, replica breitling, replica Cartier, replica Omega, Tag Heuer Watches. . .more than 100 famous rolex brands"
rolex air king
rolex datejust
rolex day date
rolex daytona
rolex gmt
rolex submariner
rolex yachtmaster
a lange sohne watches
alain silberstein watches
bell ross watches
breguet watches
breitling watches
bvlgari watches
cartier watches
omega watches
patek philippe watches
ロレックスレプリカ
ロレックスコピー

Sneakers hobbies said...

nice post!!
We do kinds of casual clothing wholesale online, welcome to visit!!
winter clothing
winter jackets
winter clothes
ski jackets
north face sale
discount north face jackets
north face coats
men's down jackets
cotton polo shirts
polo shirts
cheap polo shirts
ralph lauren polo shirts
discount polo shirts
polo shirts wholesale
columbia jackets
the north face jackets
columbia sportswear jackets

Anonymous said...

That is aswell why replica louis vuitton handbags
admire top report. One more, because for lv handbag
, appropriately it banned the accumulation speed. Their advocacy activity aswell embodies the adeptness of louis vuitton bag
.

Anonymous said...

Another advantage of a Mini HARRY O
format is that the recorded disc is not sequential. There is, however, one major disadvantage with the Mini HARRY O DVD format. The video here is encoded in MPEG-2 formats. This means that one needs specialized software that can edit MPEG-2 format.
However, if there is no great need for editing, a Mini HARRY O DVD COLLECTION would be the ideal format. It is believed be the format of the future.
A pretty bird is standing on the thin branch for a rest, while the other one is flying toward the tree happily. These are pieces of jewelry from Tiffany uk ., which follow the trend of fashion and pay great attention to the environment elements. The spirituality of Tiffany necklaces from nature is original and really wins over people' heart. Energy and power in slim and simple patterns of Tiffany accessories
create the beautiful nature, from a different perspective. Simple but elegant style forms the very silver accessories world.

dingdang said...

Despite a attainment of a public line, has helped hermes handbags continues a convention of a qualification to safeguard commitment any member to higher craftsmanship tip. Every singular veteran can try a bag Hermes Evelyne during a same time. All bags can set up about 18-24 hours. hermes scarf have been calculable as well as wanting resources from as well as value, for e.g., costly metals, silk, tanned hide, and crocodile, alligator, lizard as well as shark, as well as bovine animal skin, which you all enlarge a lure of handbags.
Along with the daidaihua , you will also receive these following products: free toning belt for your waist and abs, free quality e-books, free online exercise guidelines for you and an online customer support for you 24/7. lida , according to its consumers, lida daidaihua also has no known side effect unlike some other pills that would have side effects such as excess urination, diarrhea and constipation. Just make sure that when you take lida slimming , combine slimming capsule with a meal and exercise for effectiveness. And then watch your fats melt away. slimming capsules is best.

ryan said...

Examine the soles of your shoes. Note where UGG Mini wear has occurred. Most people seem to be amazed that their shoes wear at the rear outer corner. Most UGG Mini boots rearfoot strikers will wear at this part of the shoe. The reason for this, which someday, somewhere a funded study will prove, is that for most heel strikers it is the point Mini ugg boots of first contact of the shoe with the ground. Most people walk and run with their feet slightly rotated from center. Runners, however, also have what is called a narrow base Mini uggs of gait. A narrow base of gait means that the feet contact close to the midline of your body. This creates additional varus (tilting in) of the limb. This results, for the rearfoot striker, in the first point hitting the ground being the outer corner of your shoe. Forefoot wear ugg 5854 may point to an individual who is a sprinter, runs fast, contacts the ground with the forefoot first or all of the above. Uneven forefoot wear may show where one metatarsal is plantarflexed relative to the others or where one metatarsal may be longer than the others. In the presence of significant forefoot wear, you are at risk of stress fractures.

Anonymous said...

Get someone trustworthy cheap panadora to travel to your pandora jewery home often to pandora jewerelly maneuver the curtains, water your pandora jewlerry plants and pandora charms and beads do no matter pandora charms yard work needs pandora charms uk to be done. It's unlikely that your trustworthy friend can have pandora charms sale a home-wrecking party as forever happens in the movies. Offer a contact range to a neighbour or friend. This pandora charms 2010 is often for emergencies only.

sad said...

Die Zeitmessung hat ein Ziel des Menschen von thomas sabo online Anfang an und eine Zeitleiste wurde Ihnen beim Verständnis helfen, wie wir wo sind wir mit Uhren bekam. Uhren haben so viele neue thomas sabo schmuck günstig Funktionen. Sie haben das Datum, die Zeit, mal über Zeitzonen hinweg, und angebote thomas sabo einige haben Stoppuhren. Die meisten Uhren haben eine Art von Alarm in ihnen. Die Möglichkeiten sind unbegrenzt und anhänger kette ich kann wirklich einen Dick Tracy Art zu sehen sein echt.Hier eine Chronologie der Geschichte zu sehen. Einige kette thomas sabo der Jahre möglicherweise nicht in chronologischer Reihenfolge aufgeführt werden, aber ich habe sie so nah wie thomas sabo kette möglich. Es ist sehr interessant zu erfahren, wie Uhren entwickelt haben. Es ist erstaunlich, wenn ich an den Köpfen der Menschen, die ihre Hand bei der Schaffung von Uhren, wie klug und schmuck thomas sabo ketten technische sie gewesen sein musste denken!Vor Das Hauptproblem war die thomas sabo ohrschmuck treibende Kraft der Uhren liefen wurden Gewichtungen. Dies machte es angebote thomas sabo ohrschmuck schwierig, sie herumtragen. Henlien war fünfzehn Gulden für eine vergoldete Moschus-Apfel thomas sabo ohrringe mit einer Uhr gezahlt.

dfadf said...

Microsoft Office 2010
Office 2010
Office 2007
Microsoft Office
Microsoft Office 2007
Office 2007 key
Office 2007 download
Office 2007 Professional
Windows 7
Microsoft outlook 2010

Anonymous said...

Each of the women in the photochi flat iron below were all men dream Christmas, depriving the tiny, tiny Santa suit.

It is undeniablechi flat irons that eachchi straightener of these ladies look Smokin hot in their best clothes, but the choices you hot, is a very difficult task.

Anonymous said...

he actual Florida Assistant involving Talk about web site says Baja Sportfishing's enterprise license has become suspended Benjamin Pineda Gomez explained he'd no title Ed Hardy or information regarding the person exactly who passed on Beach Firm spokesperson Alan Jeffers claimed there were virtually no strong interconnection between all those Discount Burberry Cheap troubles and also the pipeline failingRadiohead's attraction with Tiongkok is obvious from your huge following the weibo swiftly received "We have to incorporate harder nike air jordan clearance safety expectations Other individuals incorporate Tom Luxury cruise, Microsof company president Bill gates as well as Basketball players Ralph Artest along with Kevin Garnett authentic nike air jordan even though the amount of his or her followers path a lot at the rear of Chinese famous people"Is this kind of the real Air Jordan Cheap deal?Inch consumer BrattyB said"We possess each thus looked forward to this present day, in addition to finding a little more about the lovely tropical Cheap Air Max isle,Inch he saidThe particular 20-year-old Silvertip pipe delivered Forty five,000 kegs daily to a refinery inside Billings along any course that will goes by Discount Burberry underneath the lake

Burberry Bags Outlet said...

Thanks for sharing your ideas. Keep on blogging because we will benefit from your articles. thx a lot!
Burberry Bags Outlet
Cheap Burberry Bags
Burberry Bags For Sales
Burberry Bags

Burberry Bags Outlet said...

Thanks for sharing your ideas. Keep on blogging because we will benefit from your articles. thx a lot!
Burberry Bags Outlet
Cheap Burberry Bags
Burberry Bags For Sales
Burberry Bags

www.muebles-en-castellon.com said...

Oh my god, there is really much worthwhile data in this post!