Sign In
Register
Help
". . . There is legislation presently in process, which would prevent a meltdown of the over-the-counter derivatives as it pertains to the granting entities, thereby removing from the financial perpetrators the risk of their miscalculated deeds or misdeeds. After all the legalese and flowered words are removed, what this bill intends is simple. It would prevent auditors, attorneys and bankruptcy judges from securing the assets of the profitable legs (offsetting transactions) of a derivative spread and protecting under Chapter 11 those seeking to collect from the losing side (offsetting transaction). The only way these computer falsehoods (OTC derivatives) can go bust is if the transactions are split apart in bankruptcy proceedings (the profitable side seen as money and the loss side bankrupt), as would be the present effect of the now standing laws concerning bankruptcy. The new law would make the netting of the profit and loss to zero in the transaction in case of financial failure by the grantor. . ."
http://www.financial...s/2002/1203.htm
Page 1 of 1
"the $3.5 Trillion Dollar Sure Thing"
Derivatives' market about to blow
Rate Topic:
MultiQuote
#2
Jorma 
- Assistant Professor of Stock Proctology
-
- Group: Members
- Posts: 3,584
- Joined: 17-March 02
Posted 03 December 2002 - 08:25 PM
Wouldn't this be an ex post facto law, and thus unconstitutional. How can they pass a law which alters the explicit and implicit gurantees in contracts?
Well however it is done I'm sure they will get away with it.
I am unsure the net effect this might have on JPM since their book must be full of contacts where they will be getting the short end of the stick.
If markets work, this if passed should send risk premiums to the moon and should decimate the derivatives market. After all, a party to a contract having no recourse in a bankruptsy alters the risk profile dramatically.
Well however it is done I'm sure they will get away with it.
I am unsure the net effect this might have on JPM since their book must be full of contacts where they will be getting the short end of the stick.
If markets work, this if passed should send risk premiums to the moon and should decimate the derivatives market. After all, a party to a contract having no recourse in a bankruptsy alters the risk profile dramatically.
War is the last great hope of the incompetent to order the unwilling to attempt the impossible.
William Eastlake 'The Bamboo Bed'
Totalitarians call ideology, philosophy.
Change you can suspend your disbelief in.
Fafnir
William Eastlake 'The Bamboo Bed'
Totalitarians call ideology, philosophy.
Change you can suspend your disbelief in.
Fafnir
#3 Guest_Guest_mjkst27_*
Posted 03 December 2002 - 08:46 PM
From Sinclair's article:
"Now we have a new notice to be sent by the stockholders of those public companies that are hedgers in all items: gold, currency and interest-sensitive items.
That is this entire article, with a request to your gold producer hedger investment vehicle, that they look at what would occur in terms of the specific performance due to them. I assume that this bill is not being rammed towards acceptance by the lobby of any industry other than financial firms. These derivatives, most certainly if we have seen the unthinkable, a top in the long and medium bonds, the “5th Element”, many may fail. If such should occur and this bill is successful, how will the specific performance the gold producers are depending on or required to perform themselves be affected? If adversely, then they should express their view to the committee now moving to see this bill passed."
This is just Sinclair being a crank, as usual. He probably has so little credibility remaining in the "gold community", that he has to whine to the Puplava-ites about what the gold mining companies should be thinking and doing about their hedge books.
I am quite certain the CEO's of the hedgers are big boys and can think for themselves. They really don't need Sinclair to do it for them. If they want to sell out and be tools of Big Finance - that's their prerogative. They certainly weren't going to make any money mining gold under the Rubin-Clinton gold price suppression mechanism.
Even if the hedger execs decided "hey yeah let's go to Congress and represent ourselves against this travesty. Thanks Jim Sinclair for opening our eyes! We could never have done it without you!" can you imagine how little pull these guys would have compared to the Big Finance guys? They might as well be GATA rolling in there.
Sorry to be so skeptical, I'm just fed up with Sinclair's BS. The gold bull will get here when it's expedient for the boys to have it so, and not a minute sooner.
"Now we have a new notice to be sent by the stockholders of those public companies that are hedgers in all items: gold, currency and interest-sensitive items.
That is this entire article, with a request to your gold producer hedger investment vehicle, that they look at what would occur in terms of the specific performance due to them. I assume that this bill is not being rammed towards acceptance by the lobby of any industry other than financial firms. These derivatives, most certainly if we have seen the unthinkable, a top in the long and medium bonds, the “5th Element”, many may fail. If such should occur and this bill is successful, how will the specific performance the gold producers are depending on or required to perform themselves be affected? If adversely, then they should express their view to the committee now moving to see this bill passed."
This is just Sinclair being a crank, as usual. He probably has so little credibility remaining in the "gold community", that he has to whine to the Puplava-ites about what the gold mining companies should be thinking and doing about their hedge books.
I am quite certain the CEO's of the hedgers are big boys and can think for themselves. They really don't need Sinclair to do it for them. If they want to sell out and be tools of Big Finance - that's their prerogative. They certainly weren't going to make any money mining gold under the Rubin-Clinton gold price suppression mechanism.
Even if the hedger execs decided "hey yeah let's go to Congress and represent ourselves against this travesty. Thanks Jim Sinclair for opening our eyes! We could never have done it without you!" can you imagine how little pull these guys would have compared to the Big Finance guys? They might as well be GATA rolling in there.
Sorry to be so skeptical, I'm just fed up with Sinclair's BS. The gold bull will get here when it's expedient for the boys to have it so, and not a minute sooner.
#4 Guest_Guest_Yoshaviah_*
Posted 03 December 2002 - 09:44 PM
We need not debate Mr. Sinclair's credibility. The simple fact that this bill has been introduced is evidence that something big (read ten sigma) is about to blow and the financial sector is trying to protect itself. I recall the LTCM mess (and a few others too) that caused easy Al to run the presses full speed. Perhaps this is related to Bush's hell-bent intention to start a war with Iraq. Anyway, some say gold to at least 360. At present I don't own any physical gold. I traded it all for silver a while back when I found out about the massive short position in silver on the commodities manipulation exchange. I am also thinking about investing some in copper when the DOW gets close to 5K.
#5 Guest_Guest_mjkst27_*
Posted 03 December 2002 - 10:19 PM
Yosh, I admit I'm not clear on how these things move through congress, but the resolution was introduced in 1999. The only thing I read in Sinclair's missive was that it was "in process". What did I miss that suggests some sudden new urgency behind getting this into law?
#6 Guest_Guest_*
Posted 03 December 2002 - 11:13 PM
Nice article but I think we're a long way from the scenario in which this would be used.
I can see where many people in Congress would probably not even understand this one and thus it wold pass easily. They'd probably tell the pols that it was some sort of charity bill that would help the puuuuur.
My attitude all along (and you can verify his by studying my posts) is that Gold is going to shoot the moon but in stages.
And at some point all paper markets (Comex, options, etc.) would go under.
But we're not even close now.
In my estimation we're talking $800-1000 GOLD before we get to that point.
Once we're approaching $800 Gold get out of anything that you can't touch and feel with your grubby little hands.
And as for the market crashes I find it unlikely but if it does happen sell ALL puts and 7% down, don't wait for the trading halt at 10%.
The one question I've never got a satisfactory answer to is what happend if you sell a position and it has cleared and you have the cash position in your brokers account and then the broker closes his doors.
What happens to cash positions (cash after cleared trades) in broker accounts where the broker is unable to function anymore ?
I asked my commod broker whose been in business for like 25 years and he doesn't know.
Can brokers use your funds that are in cash positions to cover there losses or use that money to trade with ?
What does it REALLY mean when you've got $100,000 in CASH POISTION in your Datek account ?
Do you really have 100K or does it depend on the health of the broker ?
I can see where many people in Congress would probably not even understand this one and thus it wold pass easily. They'd probably tell the pols that it was some sort of charity bill that would help the puuuuur.
My attitude all along (and you can verify his by studying my posts) is that Gold is going to shoot the moon but in stages.
And at some point all paper markets (Comex, options, etc.) would go under.
But we're not even close now.
In my estimation we're talking $800-1000 GOLD before we get to that point.
Once we're approaching $800 Gold get out of anything that you can't touch and feel with your grubby little hands.
And as for the market crashes I find it unlikely but if it does happen sell ALL puts and 7% down, don't wait for the trading halt at 10%.
The one question I've never got a satisfactory answer to is what happend if you sell a position and it has cleared and you have the cash position in your brokers account and then the broker closes his doors.
What happens to cash positions (cash after cleared trades) in broker accounts where the broker is unable to function anymore ?
I asked my commod broker whose been in business for like 25 years and he doesn't know.
Can brokers use your funds that are in cash positions to cover there losses or use that money to trade with ?
What does it REALLY mean when you've got $100,000 in CASH POISTION in your Datek account ?
Do you really have 100K or does it depend on the health of the broker ?
#7
Takachi
- Doctor of Stock Proctology
-
- Group: Members
- Posts: 2,828
- Joined: 06-August 01
Posted 04 December 2002 - 12:00 AM
Congress passed Homeland Security without even reading it, why wouldn't they pass something as incomprehensible as this stuff. How would you explain a yea or a nay to the average voter. If Al and Bob Rubin think its important, well thats good enough.
The purpose of the Fed is to ensure the survival of the banking system. Any other agenda item - interest rates, the markets etc - must have coincident benefits to this purpose in order to receive attention. Remember that, by and large, the beneficiaries of this legislation are the owners of the Fed.
The purpose of the Fed is to ensure the survival of the banking system. Any other agenda item - interest rates, the markets etc - must have coincident benefits to this purpose in order to receive attention. Remember that, by and large, the beneficiaries of this legislation are the owners of the Fed.
#8 Guest_yobob1_*
Posted 04 December 2002 - 07:06 AM
Sinclair is a little shrill for my tastes.
How can there not still be a loss involved? Somebody somewhere has to take it in the shorts. It would seem to me that if the risk of failure (or reward?) is removed the net effect would be the death of the derivatives market.
How can there not still be a loss involved? Somebody somewhere has to take it in the shorts. It would seem to me that if the risk of failure (or reward?) is removed the net effect would be the death of the derivatives market.
Page 1 of 1
