More Stink On The GreenScam/Bernanke... Carry Trade

G

gnome

By keeping rates artificially low for so long (and still are), the Fed created a DISASTEROUS carry trade.

1. Borrow at artificially low rate.

2. Invest in CDOs... on leverage no less

3. "Insure" your position with CDSs.

How can you lose? Spread + Leverage + Insurance = HUGE PROFITS... and there isn't even a currency risk.

BTW .... the reason they're called Credit Default "Swaps" instead of Credit Default "Insurance" is so the premium seller doesn't have to post reserves to honor his obligation.

How could GreenScam and Bernanke not understand the hazard of keeping rates so low for so long?

Call me a member of the tinfoil hat society, but it all smacks of INTENTIONAL DESTRUCTION OF THE MONETARY SYSTEM!! Why would "they" do that? Because once the monetary system is destroyed and we citizens are all hurting, we are RIPE for a big change in the form of government.

One World Government... One World Currency... and a Gestapo-esq Police State.

More BTW... Do you recall:

1. How quickly after 9/11, the Patriot Act (Great Trampler of Civil Rights) was passed?

2. How quickly Paulson came out with his "plan" for the credit crisis.. you know the one which taps the American public for likely $TRILLIONS.. AND proposed he be given "total control without review"?

3. On October 1, the FBI was granted the authority to execute "warrantless search"? That's a violation of the 4th Amendment of the Constitution!!

4. The $700B Bailout Plan gave the IRS some new and more "invasive" authority...

Just connecting the dots.... :mad:
 
gnome,

remember to always see things as a whole, and not try to connect directionally points or consequences using "logic". Otherwise, you just come out with extrapolated inference which in the end becomes meaningless.

It is the same as trying to "predict" the future in detail using the past - your RMSE will skyrocket exponentially as you go through each step of relying on inference - i.e you offset your theories on slight skewing, and accumulate the error while extrapolating from the previous error.

Ref
http://en.wikipedia.org/wiki/Systems_science
http://en.wikipedia.org/wiki/Systems_thory
http://en.wikipedia.org/wiki/Systems_thinking
http://en.wikipedia.org/wiki/Systems_philosophy

http://en.wikipedia.org/wiki/Systemic_bias
http://en.wikipedia.org/wiki/RMSE
 
Quote from Gringinho:

gnome,

remember to always see things as a whole,
More...

I think that's EXACTLY what I'm doing. And the prospect is so counter-America and so preposterous to most of us that we can't accept such a notion.. thereby making it possible they can get away with it "right under our noses"...

I can't accept all of this as coincidence... there are too many.
 
Quote from kashirin:

maybe carry trade is Japan fault?

USD still trades against yen when carry trade unwinds despite 2% rates
More...

Our crisis is not Japan's "fault". I believe the reason Japan promoted the carry was so they could get the benefit of sharply increasing money supply without being accused of "printing money"..

The "carry" can remain only so long as the value of the securities purchased and the currency differential remains profitable.

But with the GreenScam/Bernanke carry, there is no currency risk.
 
Gnome.
Yes, there is systemic bias that you are noticing - no "coincidence". I am just pointing out that you should NOT try to use logic to infer between the various points you identify - because all you will come up with will be an obviously wrong conspiracy theory easily rejected by most.

You need to see things in view of their varying degrees of influence and as a cohesive system where intersections are identifiable with interests and influences - not yes/no or true/false decisions - but varying degrees of influences. That is how you identify systems like this...
http://en.wikipedia.org/wiki/Degree_of_truth
http://en.wikipedia.org/wiki/Degree_of_belief

See my other threads on systems science, if you are interested in more.

E.g
http://www.elitetrader.com/vb/showthread.php?s=&threadid=139619
http://www.elitetrader.com/vb/showthread.php?s=&threadid=137613
but many other threads as well.
:)
 
Quote from Gringinho:

Gnome.
Yes, there is systemic bias that you are noticing - no "coincidence". I am just pointing out that you should NOT try to use logic to infer between the various points you identify - because all you will come up with will be an obviously wrong conspiracy theory easily rejected by most.

You need to see things in view of their varying degrees of influence and as a cohesive system where intersections are identifiable with interests and influences - not yes/no or true/false decisions - but varying degrees of influences. That is how you identify systems like this...
http://en.wikipedia.org/wiki/Degree_of_truth
http://en.wikipedia.org/wiki/Degree_of_belief

See my other threads on systems science, if you are interested in more.

E.g
http://www.elitetrader.com/vb/showthread.php?s=&threadid=139619
http://www.elitetrader.com/vb/showthread.php?s=&threadid=137613
but many other threads as well.
:)
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BULLSHIT! You don't see it either... Hardly a surprise... most of us don't. Until I see SOMETHING which smacks of "government doing the right thing by the people and the country", I'm going to hold to my consipracy thesis.

I'm a scientist. I like to see that which (1) confirms the hypothesis, and (2) refutes the hypothesis. Both are useful. Some theories must be a result of logical deduction when facts can't be proven.... and acknowledged as "theory" until proven otherwise.

I've seen NOTHING which looks "out of place" in my concerns.
 
Quote from gnome:

BULLSHIT! You don't see it either... Hardly a surprise... most of us don't. Until I see SOMETHING which smacks of "government doing the right thing by the people and the country", I'm going to hold to my consipracy thesis.

I'm a scientist. I like to see that which (1) confirms the hypothesis, and (2) refutes the hypothesis. Both are useful.

I've seen NOTHING which looks "out of place" in my concerns.
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If you insist on using "logics" to support your "conspiracy theory" ... then you are into fringe science.
http://en.wikipedia.org/wiki/Creation_science
http://en.wikipedia.org/wiki/Fringe_science

You need to understand complex systems...
http://en.wikipedia.org/wiki/Complex_adaptive_system
http://en.wikipedia.org/wiki/Complex_systems


That you think you can describe the world with bivalence is completely laughable.
It is NOT scientific - but radicalism and religious faith in "universally absolute truth."
 
Quote from Gringinho:

If you insist on using "logics" to support your "conspiracy theory" ... then you are into fringe science.
http://en.wikipedia.org/wiki/Creation_science
http://en.wikipedia.org/wiki/Fringe_science

You need to understand complex systems...
http://en.wikipedia.org/wiki/Complex_adaptive_system
http://en.wikipedia.org/wiki/Complex_systems


That you think you can describe the world with bivalence is completely laughable - and not scientific - but radicalism and religious faith in "universally absolute truth".
More...

BULLSHIT AGAIN! You'd stuck me as smarter than that. I'm a bit disappointed, but I suppose I shouldn't be.

Few of us have had formal training in observation and logic.
 
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