Bill Clinton: I should have better regulated derivatives

[Pa(b)st Prime]

If you can't make sense of the $VIX analogy it's you who is too stupid to compete. Risk was under weighed by not only credit agencies and Wall Street traders but by options traders. A good portion of ET blew up last year being short puts.

Don't take this wrong but in all likelihood I was positioned way before you in recognizing these problems. (see below) I was getting short because it was CLEAR that housing was rolling over hard. Traders anticipate future valuations-agencies rate the here and now.

For a generation Dick Fuld was far from an idiot. He was one of the best traders on Wall Street. Do you think any other credible trader believes Dick Fuld was duped by credit agencies? He was wrong and loaded up. Period.

Institutions created higher yield products to attract capital. Duh. In a world of FDIC/SIPC/AIG insured securities you either offered investors yield or you sat and watched the parade go by. In turn pension funds ate this shit up because they're under funded (ala' GM and CALPERS) and need to suck up high yield to pay out benefits. If Treasury rates were 8% no one would have touched these securities but for those who need more that 3% a year they were GOLDEN. Bad bet. For years they were a good bet. Plenty of funds bought this stuff in 2002 and made a mint. But all I am is a bettor. I'll let you academic fucks tell me what's going on after it happens.

Whether you're a 1 lot trader on ET or the managing director of an IB you'd better learn to take responsibility for your own actions.

From a journal entry here last January:

from Pa(b)st Prime:

Sill long 1480 and 1440 Jan puts and short 1400's. I've been scalping futures from the long side against my puts and got lucky Thursday by catching them both ways on Bernanke. I was burned in Nov/Dec by virtually the same spread so I'm very quick to buy futures. Because vols come in on the rallies I can underweight my delta hedge knowing that my short gamma will make up the diff. I have a total of 4 1480's and 6 1440's against 8 of the 1400's. As a rule I trade 5 ES long against the puts but if my hedge is done at a crappy area I'll add another 5 ES on weakness. Naturally I'd rather not do that on the coming -1000 DIA day.

Sentiment, as too many seem to know, is begging for a bounce. AAll, ISE and CBOE p/c's, ET polls and just talking to other traders, most everyone hates the market. We all know you're to fade the crowd and the crowd's either short or bearish enough to be getting short. This is one of those times that I believe the crowd is right.

I've talked earlier in the thread about football betting and sentiment. Reading consensus is a great indicator but no guaranteed be all. Just the fact that guy's who a month ago never heard of sentiment are now talking about "that fadable AAll survey" and "the retail morons are buying puts" makes me think fading the fade is the fade. Just the same I'll make judicious use of buying futures if the break doesn't seem in the offing.

Another thing. I talked about (I think I did lol) about how Bhutto was very, very big market wise. Just another instability nail, right? Notice we've never been to her asassination levels since. Well along the same lines, Friday's debacle in American Express is HUGE. The premier credit card company in the world-Amex customers have scant in common with WaMu's motley crew of borrowers-if AMEX is seeing bad things, then bad things are happening. No matter what the next 50 SPX points bring, don't be ignorant to reality. We're slipping not just into recession but into all out economic calamity. The world is broke. Don't buy into the China story either. Yea 30 million Chinese are living in Hi-Rises and drinking Lattes. A quarter billion of them are also virtually unemployed. If anything the emerging trend will be strife and labor unrest amoung emerging workers. Bet on it.

Why's gold rallying on asset devaluation? Read the above. There's folks who're increasingly scared to hold currency. They won't buy stocks, bonds or real estate because of excess valuations so they're forced into gold by default. Those who own it aren't selling because a. no where else to go and b. their macro word view is becoming the stark reality.

Good trading to everyone.

Quote from Anaconda:

You have a lot to learn. You do not even understand how ratings agencies function and their role in the industry. Comparing the VIX to credit ratings, just wow. What are you smoking?

Do you even know that the pension & sovereign funds which bought the worthless paper cannot buy anything not rated A or above? Obviously not.

It's amazing, truly amazing how in denial so many people are. I just give up. Good luck with the next few years, not that it will help you considering how clueless you choose to be.

 

[Thunderdog]

Quote from nazzdack:

1) Could've, should've, would've, might've...

Unlike GWB, who made absolutely no mistakes (that he's aware of).

 

[Anaconda]

Quote from Pa(b)st Prime:

If you can't make sense of the $VIX analogy it's you who is too stupid to compete.

Maybe you are just too stupid for basic comprehension. Or stubborn. Or both. Your hopeless argument/point was long rebutted in what you quoted by me. I would not even bother explaining how AIG was tied into the scam.

Your reasoning (or lack thereof) is a perfect example why the same establishments continue robbing this nation & world while most just stand by and think it's just incompetence. Yeah, they are fools and you are soooo smart. That's exactly why they made out like bandits while risking no capital risk whatsoever. They are so dumb, hence getting billions thrown at them right now.

Or maybe you're correct cause I'm just too stupid to understand how a Volatility Index exchange traded product is the same as a credit rating agency. Yeah, that's it. Congrats on making your point.

 

[trendlover]

Quote from Pa(b)st Prime:

If you can't make sense of the $VIX analogy it's you who is too stupid to compete. Risk was under weighed by not only credit agencies and Wall Street traders but by options traders. A good portion of ET blew up last year being short puts.

Don't take this wrong but in all likelihood I was positioned way before you in recognizing these problems. (see below) I was getting short because it was CLEAR that housing was rolling over hard. Traders anticipate future valuations-agencies rate the here and now.

For a generation Dick Fuld was far from an idiot. He was one of the best traders on Wall Street. Do you think any other credible trader believes Dick Fuld was duped by credit agencies? He was wrong and loaded up. Period.

Institutions created higher yield products to attract capital. Duh. In a world of FDIC/SIPC/AIG insured securities you either offered investors yield or you sat and watched the parade go by. In turn pension funds ate this shit up because they're under funded (ala' GM and CALPERS) and need to suck up high yield to pay out benefits. If Treasury rates were 8% no one would have touched these securities but for those who need more that 3% a year they were GOLDEN. Bad bet. For years they were a good bet. Plenty of funds bought this stuff in 2002 and made a mint. But all I am is a bettor. I'll let you academic fucks tell me what's going on after it happens.

Whether you're a 1 lot trader on ET or the managing director of an IB you'd better learn to take responsibility for your own actions.

From a journal entry here last January:

Pabst, I have much more to learn with trading, so I do not understand everything you are saying. You are a trader. You take responsibility for your bet. Ok. But you bet with risk in mind. When the rating agencys like Moodys, Fitch give rate AAA to Ambac and MBIA who insure morgage debt, then that morgage debt will get AAA rating because it was rated by a AAA Company. AAA means very low chance of default so people place the bet with this risk level in mind. When MBIA and Ambac start to have to pay the debt on the morgage bond they insured that now have defaults, then why did MBIA and Ambac still get a good rating from Moodys, Fitch and Standard & Poor? That is where the game seems like a scheme and deceitful. If the agency who has a job of rating risk (not predicting the future), is giving AAA rating to high risk, then that is lying. Then you take that instrument with AAA risk and put leverage on the bet, you make the risk even bigger, but not knowing the risk is that big.

 

[bwolinsky]

Quote from bigarrow:

You think increasing unemployment by 20 weeks puts off recovery by 46 weeks, am I reading you right.

Recovery being a quarter of GDP growth, but yes, thereabouts.

 

[Pa(b)st Prime]

Unfortunately for some investors neither they nor rating agencies used much logic when assessing risk to mortgage insurers. The same way they STILL don't use their head when assessing property insurers.

Insurance works great if just one-or even several claimants ask simultaneously for reimbursement. If you have a home fire you don't need to worry if Allstate or State Farm can make you good. But what if a hurricane hits-much like the mortgage backed tsunami. In a hurricane EVERY POLICY HOLDER will make a claim. Systemic risk is almost ALWAYS under weighed. So one day State Farm will get wiped off the map by a Miami Cat5 or an L.A. 7.4 and some dumb fuck like Anaconda will say, "thievery!! Moody's didn't WARN ME State Farm had risk!"

Earth to Mars: They're friggin' INSURERS! Their whole business is the avalanche risk of claims. If you need a ratings agency to tell you that you'll be soon parted with your capital.......

Quote from trendlover:

Pabst, I have much more to learn with trading, so I do not understand everything you are saying. You are a trader. You take responsibility for your bet. Ok. But you bet with risk in mind. When the rating agencys like Moodys, Fitch give rate AAA to Ambac and MBIA who insure morgage debt, then that morgage debt will get AAA rating because it was rated by a AAA Company. AAA means very low chance of default so people place the bet with this risk level in mind. When MBIA and Ambac start to have to pay the debt on the morgage bond they insured that now have defaults, then why did MBIA and Ambac still get a good rating from Moodys, Fitch and Standard & Poor? That is where the game seems like a scheme and deceitful. If the agency who has a job of rating risk (not predicting the future), is giving AAA rating to high risk, then that is lying. Then you take that instrument with AAA risk and put leverage on the bet, you make the risk even bigger, but not knowing the risk is that big.

 

[Pa(b)st Prime]

Quote from Mom0/pH0x:

werent nyse composite futures and other index futures trading years before that?

werent nyse composite futures and other index futures being traded well before that???

The Value Line (KCBOT) was first but only a year or two before. Trading volume of 1000 contracts a day doesn't exactly juice 'em.......

 

[Pa(b)st Prime]

And every time a commodity has a huge bull run ala' CL last year-where do critics blame. Futures specs.

When I started at the CBOT, every few months a bunch of tractors would block La Salle St with farmers blaming speculators for DEPRESSING prices through short selling. An Iowa Congressman-Neil Smith-made a career out of populist blaming of grain shorts. Rich Dennis once had to testify to Congress justifying his massive short position.

The Markey hearings and Larry Summers-yes THAT Summers-were VERY critical of SP futures for the '87 crash.

One reason you young guys never hear of these stories is because from 1994 to 2006 Congress was laissez faire Republicans. That free market train has left the station.....

Quote from Mom0/pH0x:

werent nyse composite futures and other index futures being traded well before that???


i thought they were, correct me if i'm wrong...

also, commodities futures have been traded at least since the 1600s...

 

[Pa(b)st Prime]

If Clinton operated with a Democrat majority instead of Gingrich I doubt he would have embraced many conservative principals.

Look at Clinton's first two years-huge tax hike, national health, no tell and compare his legislative agenda to 94-00.

But yes he was and is a hawk for Israel. The similarities between Bush and Clinton are far more numerous than the differences.

Quote from Mom0/pH0x:

you so called 'conservatives' sure are funny... bill clinton cut the captial gains tax in half, facilitated the wellfare reform act, the one that made it so that we dont pay women a salary for having kids... attacked al qaida on their own territory, and created the largest trade surplus weve ever had... he was more fiscally conservative than any other president weve had since i've been alive...

 

[trendlover]

Quote from Pa(b)st Prime:

Unfortunately for some investors neither they nor rating agencies used much logic when assessing risk to mortgage insurers. The same way they STILL don't use their head when assessing property insurers.

Insurance works great if just one-or even several claimants ask simultaneously for reimbursement. If you have a home fire you don't need to worry if Allstate or State Farm can make you good. But what if a hurricane hits-much like the mortgage backed tsunami. In a hurricane EVERY POLICY HOLDER will make a claim. Systemic risk is almost ALWAYS under weighed. So one day State Farm will get wiped off the map by a Miami Cat5 or an L.A. 7.4 and some dumb fuck like Anaconda will say, "thievery!! Moody's didn't WARN ME State Farm had risk!"

Earth to Mars: They're friggin' INSURERS! Their whole business is the avalanche risk of claims. If you need a ratings agency to tell you that you'll be soon parted with your capital.......

You said they did not use logic, hmm, or do they have self interest to rate AAA?
Pabst, insurance in Miami has the risk in the (price). It is high risk of hurricane, and that is known, and the price of insurance pay for that risk. So insurance companys bet (with the price they ask) that if the hurricane happens, they still have made big money for many years to cover the bet and profit. For the same house but in a no hurricane state, the price is less. The risk is (known) But when you put AAA on something that is closer to a junk bond, but people buy it thinking it is AAA, then add leverage, then add side bets (derivatives), then it is not the same openess of risk as knowing where the hurricane is more likely to happen...Miami or New Jersey. And that systemic risk is so big because now the risk is bought and sold in instruments that have no regulation of ratio of money to cover their bet. Now it blows up. Is that capitalism, or is that scheme?