What are derivatives?

[seanD]

If you want to know what derivatives are, how they function, and how they affect the market and the economy as a whole, this is probably the best and most concise overall article I've read so far.

alternet.org (http://www.alternet.org/economy/147179/%22lure_people_into_that_calm_and_then_just_totally_f--k_%27em%22:_how_all_of_us_pay_for_the_derivatives_market/)
Link contains extremely vulgar terms

[JusticeMachine]

Here is another good example:

http://www.youtube.com/watch?v=r66MMYyz9VI

[seanD]

Here is another good example:

http://www.youtube.com/watch?v=r66MMYyz9VI

What Greenburger doesn’t tell us though (probably because it wasn’t official at the time and would have been considered a conspiracy theory) is that Goldman Sachs packaged those mortgages into CDOs, purposely picking the ones that would fail, and then sold it to their customers in order to dump it onto someone else. Then on top go that, they bet against the CDOs. So the TARP fund was not only to bail out these criminal institutions, but essentially financing their criminal activity.

Another thing he was wrong about is that the housing bubble alone was not 4 trillion, but estimated somewhere around 60 trillion (though the video was a year old and still premature). Right now the derivative market is estimated at 1.2-1.5 quadrillion. IOW, it’s a virtual market within a market. Now imagine what will happen when (not if) the dollar collapses, either by deflation or hyperinflation, and all those derivatives that are used as hedges on the dollar have to be paid.

[Littlejoe]

Greenberg doesn't say because he was part of the reason it was never regulated to start with. He testified before congress against Brooksley Born and disagreed with her that derivatives needed regulating. It's the reason regulation of derivatives didn't happen.

[seanD]

* edited by a moderator *
* moderator notice *

Sorry about that, my bad.

[Benson Shays]

Good info. Thanks for the you tube video.

[Zombie]

ive been reading R Cristopher Whalen lately, he claims the bottom of the houseing market hasnt fallen out yet, maybe at best only half. something to do with badly written(fast-tracked) paperwork involving trustees that the banks dont want to, or can pay to fix.