tag:blogger.com,1999:blog-4102429195693595750.post4590844045306624044..comments2024-02-24T19:10:00.395+02:00Comments on Sudden Debt: Perception Creates RealityHellasioushttp://www.blogger.com/profile/03564511281240682625noreply@blogger.comBlogger49125tag:blogger.com,1999:blog-4102429195693595750.post-65897621116652169182010-03-29T14:13:16.904+03:002010-03-29T14:13:16.904+03:00And Hell ?
Perception creates reality.
Language cr...And Hell ?<br />Perception creates reality.<br />Language creates perception.<br />Thus...<br />Love those Matryoshka dolls, dixit Thai.<br />Tune in to my future posts about the lexic in structural linguistics (if you aren't already tuning in...) for a future installment on how banking becomes "banking". Actually banking does NOT become "banking". The meaning of banking changes in opposition to other words in the linguistic (social) system..<br />The meanings of our words are ALWAYS changing.<br />And.. our perception changes with them. <br />So... banking does not become "banking"... Lord Blagger, I am starting to find your point of view very interesting. A retournement de veste ? Maybe.<br />I reserve the right to change my mind on things at all times. And rechange it on occasion too.Debrahttps://www.blogger.com/profile/01510189619803992336noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-3619564769548791032010-03-29T12:29:39.917+03:002010-03-29T12:29:39.917+03:00Believe it or not, Edwardo...
I have NEVER SEEN Ru...Believe it or not, Edwardo...<br />I have NEVER SEEN Rush.<br />One of those incredible advantages that comes with expatriation...<br />On gambling and risk..<br />It would seem that man is a gambling animal that JUST HAS TO HAVE HIS DOSE (fix ?) OF RISK, (like he has to have his dose of arguing about the number of angels on the head of a pin...).<br />So... what are we going to do in our society to ensure that the risk that makes us truly LIVE does not take us down ?<br />And anyway, maybe the "solutions" can only be at an individual level...Debrahttps://www.blogger.com/profile/01510189619803992336noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-24493579322120308482010-03-29T04:54:54.295+03:002010-03-29T04:54:54.295+03:00It was meant to be an allusion to Rush's physi...It was meant to be an allusion to Rush's physical size.Edwardohttps://www.blogger.com/profile/03613197383283896190noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-50647655514556275342010-03-28T02:00:51.403+02:002010-03-28T02:00:51.403+02:00Why, Edwardo ?
Do you think that I am minimizing R...Why, Edwardo ?<br />Do you think that I am minimizing Rush ?<br />Sorry about the spelling mistakes.<br />Fallout from being between two continents..Debrahttps://www.blogger.com/profile/01510189619803992336noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-49587720934149429692010-03-27T19:21:18.366+02:002010-03-27T19:21:18.366+02:00C'mon now, Deb, how can you say, "on a mu...C'mon now, Deb, how can you say, "on a much smaller scale...Rush Limbaugh?"Edwardohttps://www.blogger.com/profile/03613197383283896190noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-53362514382810788112010-03-27T13:57:43.970+02:002010-03-27T13:57:43.970+02:00Oh dear.. sermonizing? I tend to be insufferably d...Oh dear.. sermonizing? I tend to be insufferably didactic on occasion, but sermons I leave to Baptists, Methodists and Mullahs.<br /><br />I am rather Socratic: "I only know one thing, that I know nothing".<br /><br />Be well and prosper,<br />H.Hellasioushttps://www.blogger.com/profile/03564511281240682625noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-13317699860191322122010-03-27T12:47:43.755+02:002010-03-27T12:47:43.755+02:00Heart attack.
YOU are sermoning ME on BELIEF ?
LO...Heart attack.<br />YOU are sermoning ME on BELIEF ?<br />LOL LOL LOLDebrahttps://www.blogger.com/profile/01510189619803992336noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-11388693873365702642010-03-27T11:07:20.621+02:002010-03-27T11:07:20.621+02:00Like it or not, Debra, most all people WANT to bel...Like it or not, Debra, most all people WANT to believe in something. Be it God, Godot, natural selection, quantum physics, ethereal thought waves, that reality is as we see it, the value of money, whatever.<br /><br />God, therefore, is NOT a construct of our thoughts and desires. <br /><br />He/she/it IS our thoughts and desires.<br /><br />Hallelujah,<br /><br />HellHellasioushttps://www.blogger.com/profile/03564511281240682625noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-10628742437189276082010-03-27T10:29:36.302+02:002010-03-27T10:29:36.302+02:00Little old naive me. I thought that banks went bus...Little old naive me. I thought that banks went bust when people RAN on them for example.<br />Like when EVERYBODY wanted their money AT THE SAME TIME.(Sheds a new perspective on the retirement of the baby boomers, right ? LOTS of people wanting their money at the same time..)<br />Now.. if everybody DOESN'T WANT his money at the same time, there should be some... MARGIN for the banks to be able to do business WITHOUT having the whole system grip up. <br />The CDS question looks to me like... ANOTHER door opening. As I go blue in the face remarking on this blog, one of the first doors that was opened to get us where we are now was the one that Calvin forced open at the reform, the one that got Protestant (Christian...) banking going. On the INTEREST QUESTION. Making money AT THE SAME TIME, AND AT THE SAME LEVEL, the symbolic INSTRUMENT of exchange AND... the OBJECT of that exchange. There goes an important distinction/difference RIGHT OUT THE WINDOW. (I really should take a look at how the Catholic Medicis were doing their banking. But NOT on Wiki. God help me...)<br />Geez, Hell, "arguing about money as though it were a question of the number of angels on the head of a pin" ? <br />Money IS indissociable from theology. For all the old reasons that I keep saying, like.. throw God out the door, and he comes back through the window IN A FORM UNDER WHICH YOU WILL NOT NECESSARILY RECOGNIZE HIM.Debrahttps://www.blogger.com/profile/01510189619803992336noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-86268349865646462392010-03-27T06:38:28.936+02:002010-03-27T06:38:28.936+02:00There are banks, "banks" and "other...There are banks, "banks" and "other financial institutions". Unfortunately, we have managed to mash them all together into a big lump and allowed them to play with fire, regardless of who they are and what their role is - or should be.<br /><br />The comment section is too small so I will write a post on this..Hellasioushttps://www.blogger.com/profile/03564511281240682625noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-35879285354340088152010-03-27T02:54:35.093+02:002010-03-27T02:54:35.093+02:00LB,
If AIG were allowed to go bust, it would have...LB,<br /><br />If AIG were allowed to go bust, it would have brought down many big banks and caused financial meltdown (i.e. systemic risk.) Note that many of these banks were "hedged" but they would not have survived the crisis.<br /><br />CDS is not a football game. No one should be allowed to bet on people/country's livelihoods. If CDS were regulated, we would not be dealing with this mess.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-55330102460087744702010-03-27T01:48:06.757+02:002010-03-27T01:48:06.757+02:00I give up.I give up.Debrahttps://www.blogger.com/profile/01510189619803992336noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-49133125422889358992010-03-27T00:46:58.330+02:002010-03-27T00:46:58.330+02:00Nothing to do with physics.
Let me explain system...Nothing to do with physics.<br /><br />Let me explain systemic risk. It's the risk of contagion. A failure of one bank causes failures of other banks, which ....<br /><br />Why do banks go bust? They go bust in part because their clients go bust. Think of the US where all those customers defaulted on their home loans. The banks lose money. They go bust when their losses exceed their capital. <br /><br />So, if a bank hedges its credit risk, it doesn't lose capital when a customer defaults. <br /><br />ie. Hedging out your credit risk reduces the probability of going bust. <br /><br />Now, if you don't go bust, you can't cause a systemic risk event.<br /><br />So, perhaps you can tell us why you think the opposite is true and why?Lord Blaggerhttps://www.blogger.com/profile/06783119146180259097noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-49076660048361400492010-03-26T23:02:16.600+02:002010-03-26T23:02:16.600+02:00"If a bank hedges out its credit risk, its le..."If a bank hedges out its credit risk, its less likely to go bust. If its less likely to go bust, then systemic risk goes down."<br /><br />I suspect that this statement is wrong as it seems to violate the laws of physics.Thaihttps://www.blogger.com/profile/00700253024420397221noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-27313207433030724952010-03-26T21:24:46.612+02:002010-03-26T21:24:46.612+02:00Lord Blagger, you didn't read my comment caref...Lord Blagger, you didn't read my comment carefully...Debrahttps://www.blogger.com/profile/01510189619803992336noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-37891007869018597662010-03-26T21:24:01.147+02:002010-03-26T21:24:01.147+02:00Ho hum.
All this talk about Greece.
WHY AREN'T...Ho hum.<br />All this talk about Greece.<br />WHY AREN'T WE TALKING ABOUT CALIFORNIA ??...Debrahttps://www.blogger.com/profile/01510189619803992336noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-26286045074941608302010-03-26T20:46:18.472+02:002010-03-26T20:46:18.472+02:001. The CDS market is larger than the underlying ma...<i><br />1. The CDS market is larger than the underlying markets. It's not really hedging or insurance (or not generally).<br />2. This creates more systemic risk.<br />3. Which would be fine except the government tends to bail out failed financial players (eg AIG).<br />4. I don't understand how these instruments (except bona fide hedging) actually support the real economy. What am I missing?</i><br /><br />1. The reason why the market is larger than the underlying market is quite straightforward. If it wasn't the case, you wouldn't have liquidity. ie. Having a large pool of willing buyers and sellers means that if you want to trade you can.<br /><br />However, there are cases with CDS where this has caused problems in the past. It's largely technical but I'll explain. <br /><br />Some CDS contracts have default conditions where the seller of protection will buy the physical bond at par on default. So the person who's insured the bond just delivers the bond and gets the full value. The loss to the seller is 100 * (1-recovery rate)<br /><br />Now some buyers of protection didn't hold the bond (think about reinsurance). They then had to buy the bond in order to deliver it. That drove the price up to well above the recovery rate. <br /><br />Since this has happened almost all CDSs have move to cash settlement. A panel works out the price, and its just cash that changes hands.<br /><br />So back to the trading volumes. If a share is traded many times a year, is that wrong? The trading volume is more than they number of shares in existance?<br /><br />ie. Back to the insurance and re-insurance. The volume will be larger than the actual amounts insured. However I see no problem there. Why is there a problem with a seller of insurance, insuring themselves (Hedging) with someone else?<br /><br />How can you tell it creates systemic risk? If a bank hedges out its credit risk, its less likely to go bust. If its less likely to go bust, then systemic risk goes down.<br /><br />As for bailouts, I'm dead set against it. They should have been left to go under. Banking and socialism don't mix.<br /><br />They support the economy in various ways.<br /><br />1. Making the cost of credit risk explicit.<br /><br />2. Allowing people to tailor their risk. <br /><br />ie. Back to the perception creating reality.<br /><br />Does measuring the risk of Greece going bust, mean that the risk changes. <br /><br />Would the non existance of a CDS market mean that Greece had no risk of default?Lord Blaggerhttps://www.blogger.com/profile/06783119146180259097noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-490819564738053812010-03-26T20:32:58.748+02:002010-03-26T20:32:58.748+02:00Re: CDS increasing systemic risk
I don't know...Re: CDS increasing systemic risk<br /><br />I don't know much about CDS but I will say this, as I do know a fair bit about disasters- let's say my work bumps me up against it not infrequently.<br /><br />Anyway, what is absolutely clear from the data is there has been a massive increase in both the scale and number of natural disasters over the last 50 years. And disaster epidemiologists have studied this issue at length asking the simple question: "why?"<br /><br />And you know what they found?<br /><br />People are putting themselves in harm's way more now than ever before?<br /><br />And so the same epidemiologists asked again: "why?"<br /><br />And guess what they found (again)?<br /><br />People believe more than ever that they can get away with all kinds of stuff because they have insurance. I mean the places people now build there homes is simply beyond the logic of common sense. But of course, these places are very alluring.<br /><br />And still we keep on picking up the tab.<br /><br />Never let throwing someone else's perfectly good money after bad prevent you from doing it yet again.Thaihttps://www.blogger.com/profile/00700253024420397221noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-73704616809447884102010-03-26T20:27:41.792+02:002010-03-26T20:27:41.792+02:00Okie, I was not criticizing you in any form in my ...Okie, I was not criticizing you in any form in my remark. I was critical of the author of your link.<br />Saying the game's up in the context of Hell's post, where... perception creates reality seems... ill advised to me. Doesn't bolster any.. FAITH in our ability to work our way out of this mess. <br />Jonah, chapter 3 and 4.<br />The Lord mandates Jonah to go to Ninevah and tell the people to repent, and... the people repent..<br />And Jonah is all pissed off because he wanted to see a scene out of the Raiders of the Lost Ark.. where God got all angry.<br />The guys who wrote the Old Testament were aware of the fact that prophecy comes as naturally to men (and women) as breathing.<br />That's why they cautioned against.. FALSE prophets.<br />You know ? People like.. Adolf Hitler. Or, on a much smaller scale...Rush Limbaugh, for example... (from what I HEAR on this blog, at any rate. Expatriation has some advantages. Some)<br /><br />For Lord Blagger.. A rose BY ANY OTHER NAME, does it smell as sweet ?<br />We are in agreement about the... CULTURE/ECONOMY of insurance.<br />I wish you guys would all read "The Merchant of Venice" by my dear Will. Just the... casket portion would do you ALL good.<br />To "obtain" Portia, her suitors have to choose between THREE caskets : one gold, one silver, and one.. lead.<br />Here is part of the tirade of Arragon, the ill fated suitor who chooses the... silver casket.<br /><br />..."Gold, silver, and base lead.<br />"Who chooseth me must give and hazard all he hath".<br />You shall look fairer ere I give or hazard.<br />What says the golden chest ? Ha, let me see !<br />"Who chooseth me shall gain what many men desire."<br />What many men desire -- that "many" may be meant<br />By the fool multitude that choose by show,<br />Not learning more than the fond eye doth teach...<br />I will not choose what many men desire,<br />Because I will not jump with the common spirits<br />And rank me with the barbarous multitudes.<br />Why then, to thee, thou silver treasure house !...<br />"Who chooseth me shall get as much as he deserves".<br />And well said too, for who shall go about<br />To cozen fortune, and be honorable <br />Without the stamp of merit ? Let none presume<br />To wear an undeservèd dignity,<br />O THAT ESTATES, DEGREES AND OFFICES<br />WERE NOT DERIVED CORRUPTLY, AND THAT<br />CLEAR HONOR WERE PURCHASED BY THE MERIT OF<br />THE WEARER !...<br />How many be commanded that command..<br />But to my desert..<br />I WILL ASSUME DESERT...."<br /><br />HE DOES NOT PASS GO. He does not collect... $3 billion dollars. Obama (whoops, Arragon) does NOT save the U.S. economy...<br /><br />Here is what he gets instead of salvation. A note, with this on it :<br />.....<br />"SEVEN TIMES TRIED THAT JUDGMENT IS<br />THAT DID NEVER CHOOSE AMISS.<br />Some there be that shadows kiss ;<br />Such have but a shadows bliss.<br />There be fools alive iwis (I know)<br />Silvered o'er, and so was this."<br />.....<br /><br />Silver in the play is a metaphor for "that common drudge twixt man and man" that money is.<br />CDS's, insurance, the whole speculation game offer a fool's head and a shadow's bliss to those that... kiss them.Debrahttps://www.blogger.com/profile/01510189619803992336noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-55622566524045882302010-03-26T19:53:44.787+02:002010-03-26T19:53:44.787+02:00Lord Blagger, You make a lot of great points but t...Lord Blagger, You make a lot of great points but the issue for me is that:<br />1. The CDS market is larger than the underlying markets. It's not really hedging or insurance (or not generally). <br />2. This creates more systemic risk. <br />3. Which would be fine except the government tends to bail out failed financial players (eg AIG). <br />4. I don't understand how these instruments (except bona fide hedging) actually support the real economy. What am I missing?Unknownhttps://www.blogger.com/profile/15156805298174114452noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-70063342539148669822010-03-26T18:50:25.635+02:002010-03-26T18:50:25.635+02:00On my speling, no offence taken.On my speling, no offence taken.Lord Blaggerhttps://www.blogger.com/profile/06783119146180259097noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-35540509358217914932010-03-26T18:32:14.635+02:002010-03-26T18:32:14.635+02:00Uh, Lord Blagger, normally I don't point out o...Uh, Lord Blagger, normally I don't point out other's misspellings; but the word is "<i>fallacy</i>" not "falicy."OkieLawyerhttps://www.blogger.com/profile/17071917464425173379noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-6252958153630469912010-03-26T18:25:41.734+02:002010-03-26T18:25:41.734+02:00jp:
Follow me:
type < a href="put the li...jp:<br /><br />Follow me:<br /><br />type < a href="put the link here (just copy and paste it)">after you close the > you can put any text you want to link then < /a><br /><br />Do this without the space between the < and the a href" and without the space between the < and the /a<br /><br />and <i>viola</i>, you should have a link.OkieLawyerhttps://www.blogger.com/profile/17071917464425173379noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-35669886936220650982010-03-26T18:23:19.968+02:002010-03-26T18:23:19.968+02:00It's a financial instrument that can also be u...<i><br />It's a financial instrument that can also be used for manipulation of other things for the purposes of making a profit, if I understand it correctly.</i><br /><br />Such as? (apart from making a loss)Lord Blaggerhttps://www.blogger.com/profile/06783119146180259097noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-20608688040597838232010-03-26T18:22:18.451+02:002010-03-26T18:22:18.451+02:00Just to make a small prediction. We will have some...Just to make a small prediction. We will have someone along who will say, look, CDS's is like trading in insurance on something you don't own.<br /><br />ie. Me taking out life insurance on someone else where I have no financial interest. That's should be banned. <br /><br />A direct analogy in the games world would be to say that only the players in a game are allowed to make bets. Hmmmm.<br /><br />However, if you aren't allowed to be involved in insurance unless you own an asset, doesn't that ban the insurer from getting involved?<br /><br />Ah, you can sell insurance on something you don't own. You can't buy insurance on something you don't. Perhaps that's a good rule, or is it?<br /><br />So lets see about the insurer. There is what is called the re-insurance market. Here an insurer buys insurance for something it doesn't own, in order to hedge its exposure. The rule above would ban that, and lead to a vast increase in risk for insurers, with the likelyhood that more go bust, and the customer is left out of pocket. <br /><br />ie. It goes back to some of the real falicies about any market.<br /><br />1. The market is going down because people are selling, or the market is going up because people are buying. Falicy is that buyers and sellers are matched.<br /><br />2. All this trading provides nothing. It does, its called liquidity. <br /><br />So lets say you want to go on holiday and want some mexican pesos. No speculators means no middle men. You have to find a mexican coming to the US and wanting to change money from pesos to dollars. No speculator - no banks or bureau do change. They are speculating. Buying now at one price and hoping to exchange later, and making a profit.<br /><br />However, the general point about observations affecting things I think is valid, and the effect is good.<br /><br />ie. CDS spreads showed just how much a basket case Greece was. Equaly, you could just compare the spread between German and Greek bonds. It's the same thing. I don't notice many complaints about that.Lord Blaggerhttps://www.blogger.com/profile/06783119146180259097noreply@blogger.com