The real bailout (of our future)

[Impaler[WrG]]

Why aren't you giving a good example and cancel any insurance policies you may have? After all, you're being morally hazarded by those.

I think that only the owner of an asset should be allowed to buy insurance on that asset.

ummm??

The only Insurance I currently have is the mandatory auto insurance, which covers the liability I would incur in an accident. If I owned a home I would buy insurance on my assets. I would NOT buy insurance on anyone else house, in fact I think thats illegal for us plebs, only AIG can be trusted with that kind of power

[KrazyHorse]

Originally posted by Colonâ„¢


For ****'s sake. Second time I'm saying this. The entire, millenia-old, insurance industry is based on spreading risks. It's not because it's got an unfamiliar name it's inherently the devil's tool.

Look, we should definitely go back to the time when enterprises were shouldered entirely by small groups of individuals. We all know how productive small businesses are, in general.

[KrazyHorse]

Originally posted by Impaler[WrG]




ummm??

The only Insurance I currently have is the mandatory auto insurance, which covers the liability I would incur in an accident. If I owned a home I would buy insurance on my assets. I would NOT buy insurance on anyone else house, in fact I think thats illegal for us plebs, only AIG can be trusted with that kind of power

Just a side note, but you do realize that with a few exceptions only proper nouns are supposed to be capitalized in English, right? You drive me nuts with your random capitalization scheme.

[KrazyHorse]

Colon, you should also note that this guy thinks we should replace fiat currency with currency backed by a basket of commodities.

But allowing people to buy insurance on assets they don't exist is an example of dangerous financial engineering.

[Kidlicious]

Originally posted by Impaler[WrG]
being able to spread risk encourages excessive risk and opens up the whole system to failure.

That's the beauty of capitalism. One day it will all be over.

[Colonâ„¢]

Originally posted by KrazyHorse


Look, we should definitely go back to the time when enterprises were shouldered entirely by small groups of individuals. We all know how productive small businesses are, in general.

They tried that with the French revolution. As with directly electing judges, it didn't last long.

[Kidlicious]

Originally posted by KrazyHorse


Look, we should definitely go back to the time when enterprises were shouldered entirely by small groups of individuals. We all know how productive small businesses are, in general.

Do you think derivatives make businesses more productive?

[BKWM]

Originally posted by Kidicious


Do you think derivatives make businesses more productive?

only if you use the chain rule to chain them to their desks and force them to work

[KrazyHorse]

Originally posted by Kidicious


Do you think derivatives make businesses more productive?

I think that they allow businesses to take socially beneficial risks they wouldn't otherwise take.

[KrazyHorse]

Originally posted by BKWM



only if you use the chain rule to chain them to their desks and force them to work

Weak.

[Kidlicious]

Originally posted by KrazyHorse


I think that they allow businesses to take socially beneficial risks they wouldn't otherwise take.

I can see the reasoning there. Insurance is beneficial because it encourages credit.

But the derivatives market seems to have gotten out of control because their value is tied to speculative assets. The're like insurance, but they are like stocks too.

[Kidlicious]

I think derivatives have contributed to globalization and credit expansion. I don't think either of those things are sustainable though, not at the extent to which they have expanded.

[One_more_turn]

The problem with current CDS implementation is that speculators are buying multiple (10x more) insurance policies on the same piece of asset. Suppose I can buy 100 insurance policies on someone's car at a fraction of its value, then I will do it and hope that person crashes.

[KrazyHorse]

Originally posted by One_more_turn
The problem with current CDS implementation is that speculators are buying multiple (10x more) insurance policies on the same piece of asset. Suppose I can buy 100 insurance policies on someone's car at a fraction of its value, then I will do it and hope that person crashes.

So? There's somebody on the other side of the deal who's "hoping" that the guy doesn't.

Not to mention the fact that the 10X figure is gross, not net.

Dolt.

[DanS]

Originally posted by KrazyHorse
Apparently the CME has had one up and running for over a year, but the banks were boycotting it.

We might need a regulatory push toward the clearinghouse model.

Would the CME get any business, even if CDS trades were pushed toward the clearinghouse model?

I can imagine that there are other trades to accomplish what a CDS is accomplishing.