Replies to post #40948 on Your Economy (No Politics) (YE1)

[gloe]

EU manages to start clearing CDOs at the end of July (like now): http://news.ino.com/headlines/?newsid=68998069748303

Under pressure from the Eropean Union, banks in Europe will start processing complex financial contracts known as credit default swaps through a central clearing house by the end of July, EU regulators said Friday.

Swaps offer insurance against securities for lenders worried about a borrower's ability to pay them back. The unregulated $60 trillion market lost its main central clearing house to handle the deals with the September collapse of U.S. investment bank Lehman Brothers.

Clearing manages who is liable for losses and a central counterparty becomes the buyer and seller to every trade in order to manage the risk in the market. For swaps, many deals were done by buyers and sellers directly and in private without clearing, a practice regulators view as risky.

The swaps can lead to huge financial exposures when companies go bankrupt unexpectedly, as three Icelandic banks did last year. They are commonly used contracts to insure against the default of financial instruments such as bonds and corporate debt. But they also are bought and sold as bets against defaults, even by parties that do not own the security in question.

Frustrated by the financial industry's failure to plug the gap left by Lehman and agree on a clearing house by the end of last year, the European Commission threatened that regulators would step in and set up their own system in Europe.

Two EU-based clearing houses are now operational _ ICE Clear and Eurex Clearing _ and another, LCH.Clearnet SA should follow by the end of the year, the EU executive said.

Regulators said they expected "that as of today, dealers will live up to their commitment and will start using all available central counterparties for all eligible trades."

They said they would monitor how many deals were moving to the European clearing houses and would publish new ideas on regulating over-the-counter derivatives in October.

Credit default swaps played a prominent role in the credit crisis that brought the downfall of Lehman Brothers Holdings Inc., a government rescue plan for giant insurer American International Group Inc., and Merrill Lynch & Co.'s sale to Bank of America Corp.

The huge volume of credit default swaps sold by AIG, for example, coupled with rising levels of defaulted mortgage and other debt, threatened the company's existence and prompted the government to spend $150 billion to bail it out to avoid a catastrophic collapse. If AIG were to fail, the losses would spread to the companies and investors who bought the swaps.
=========

Here in the U.S., well, we MIGHT get a new las passed by the end of the year and then probably they will have at least 6 mo. to a year to get started on this.

[SilverSurfer]

too late ....
redistribution a done deal, profit reaping from nefarious means, built into the system for GS , JPM etc... either mount a case and get D.C. to inquire or try to make $ along with the crooks... ;^(

[Koikaze]

re: "... but what is our remedy ?"

Change the way we select the people we put in public office!!!!


Eliminate the corrosive effects of the campaign process. Even worse than the inherently corruptive nature of soliciting funds to finance a campaign, which invites demands from the financial backers, is the destruction of the candidate's psyche caused by the pandering required to attract votes.

Candidates must appear to stand for something but, to attract support, they continually adjust their assertions to appeal to the diverse groups whose votes are required for their election. Their personal beliefs must be subordinated to the interests of their audience. They gain expertise in avoiding direct answers to questions and diverting attention from unwelcome topics. Thus, campaigning is just training in the art of deception.

Campaigning is the antithesis of open inquiry, it is one-way communication centered on deceit, misdirection and obfuscation rather than integrity and commitment to the public interest. That is why the term 'politician' is pejorative. The process of campaigning produces people adept at appearing to champion some idea while standing for nothing but the success of their party.

To make matters worse, candidates are incessantly lionized by their supporters. This, coupled with the insidious effect of repeatedly proclaiming their own rectitude seduces them into believing their own press clippings. These things have a debilitating effect on the candidate's character, and, since morality is a top-down phenomenon, choosing political leaders by this method destroys society.

It is frustrating that the people already know these things but have come to believe them unavoidable. If we wish to improve our political systems, I think it important to call attention to the adverse effects of campaign-based politics and devise a way to select the best among us as out political leaders, rather than the worst.

Fred Gohlke

[MisterEC]

it should outrage taxpayers. but what is our remedy ?

Our forefathers gave us a remedy. All have to use it.

List of Arguments in Favor : 
  1. Overwhelmingly, voters prefer term limits.  
 (It's their native commonsense!)  
   2. Term limits downgrades seniority, favors meritocracy. 
   3. Increases competition, encourages new challengers. 
   4. Builds a ‘citizen’ Congress, drives out career politicians. 
   5. Breaks ties to special interests. 
   6. Improves tendency to vote on principle. 
   7. Introduces fresh thinking, new ideas, eliminates 'old bulls'. 
   8. Reduces power of staff, bureaucracy, lobbies. 
   9. It will create a natural reduction in wasteful federal spending. 
 10. Encourages lower taxes, smaller government,  
 greater voter participation in elections. 
 11. There are more reasons in favor of term limits than reasons against. 
 12. Gets reelection rates back to near 50%, versus the current 99%.  
 (Founders called it "rotation in office")  
  
 List of Arguments Opposed :  
   1. Terminates the good politicians along with the bad. 
   2. Instead of term limits, a reform of Congress' procedures 
  would be easier. 
   3. Reduces range of voter choice. 
   4. Loss of knowledge and experience. 
   5. Increases the power of staff, lobbies, and bureaucracy.