Wednesday, June 15, 2011

We don't know the extent of the risk that's out there ... Why?

Our financial markets are getting clobbered. I'm glued to investment TV (CNBC and Bloomberg) this evening listening to interviews of professional investors and traders as they discuss the Greek situation. Larry Kudlow's show on CNBC this evening was interesting. Larry interviewed Boris Schlossberg, GFT's head of ForEx Research. Boris did an excellent job of summarizing why our markets are in panic mode. He simply pointed out that the extent of the risk out there is unknown as it pertains to Greek debt. We simply do not know who is at risk of losing how much, if and when Greece defaults on its debts. This is exactly what caused the panic of Lehman and AIG in the fall of 2008. Back then, we simply did not know who was on the hook for sub-prime housing debt and by how much.

We don't know.

We don't know.

We don't know.

But why don't we know?

We don't know because we still allow our fucking banks to write, trade, own insurance on financial instruments, with no collateral backing, not traded on an organized exchange, and where anyone can trade the insurance whether or not they have an economic interest in the underlying asset that is being insured. In other words, even if Greece had only $1 in debt outstanding, for all we know, there could be $100 Trillion in bets against that $1. And US Banks could carry all, or none. We just don't know. But we do know that the cascading effect of the losses incurred on that $100 Trillion in bets could take down our entire world financial system. BUT, NO ONE KNOWS. We're blind. We're in a panic. And we're running for the exits.

How in the living hell, three full years after Lehman and AIG, could we still be in this situation?

Republicans. They don't want sensible, reasonable, rational regulation. Republicans. They kiss the ass of every overpaid banking executive in our country and fight to the death to allow these bankers to continue to take out-sized risks. Republicans. They continue to fight against regulating the CDS market (insurance on debt). Republicans are once again going to screw America.

If you're reading this and find yourselves with significantly less savings as a result of a Greek debt default disaster in the coming weeks, you only have yourself to blame if you voted for our worthless, POS, good for nothing moron of a Senator, Richard Burr. It's the ignorance of the Richard Burr's of the world that put us in a situation where we continue to be held hostage by the gambling going on in our banks. It needs to stop. We need to wake up and kick Republicans out of office.

But, if I'm right. It's too late. The Greek situation is going to be a debacle. It will be the straw that breaks the back of the world economy and sends the entire world into a lengthy period of chaos.

We deserve better than ignorant, worthless, POS, good for nothing politicians like Republican Senator Richard Burr.

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