Economics 101
OK, 3rd World America. Short BUT Spot On!
Ain't that the TRUTH! Highway Psychopaths on Interstate 666, Evil Empire Compound across Puppets Obey Road, Lucifer City, Screw You People Nation! #EndTheLies
Lies Feeding Frenzy Begins #LFFB Fear Factor Episode Soon #FFES
#StayVIGILANT Folks! FIGHT for your CHILDREN'S FUTURE! #WontGetFooledAgain
A satirical short film taking a look at the national debt and how it applies to just one family. Watch the guy from the Ferris Bueller Superbowl Spot! Produced by Seth William Meier, DP/Edited by Craig Evans, 1st AC Brian Andrews, Sound Mixer Gus Salazar, Written and Directed by Brian Stepanek. Help us spread the word by clicking ads or at www.debtlimitusa.org.
3rd World Peeps of A 3 cents “Where TRUTH Matters because WE are all Human Beings.”
Scrutinize the candidates BEFORE/AFTER Election. Why? It’s because WE are a Human Being! IT’S PAYBACK TIME!!!
Please remember that out of 535 elected officials in Congress, there’s only a HANDFUL or LESS that’s been serving for the best interest of the majority of the people!!! How PITIFUL is that? IT’S PAYBACK TIME!!!
#WeThePeople #UnchainedUs #LegalizeFreedom
Ain't that the TRUTH! Highway Psychopaths on Interstate 666, Evil Empire Compound across Puppets Obey Road, Lucifer City, Screw You People Nation! #EndTheLies
Lies Feeding Frenzy Begins #LFFB Fear Factor Episode Soon #FFES
#StayVIGILANT Folks! FIGHT for your CHILDREN'S FUTURE! #WontGetFooledAgain
A satirical short film taking a look at the national debt and how it applies to just one family. Watch the guy from the Ferris Bueller Superbowl Spot! Produced by Seth William Meier, DP/Edited by Craig Evans, 1st AC Brian Andrews, Sound Mixer Gus Salazar, Written and Directed by Brian Stepanek. Help us spread the word by clicking ads or at www.debtlimitusa.org.
3rd World Peeps of A 3 cents “Where TRUTH Matters because WE are all Human Beings.”
Scrutinize the candidates BEFORE/AFTER Election. Why? It’s because WE are a Human Being! IT’S PAYBACK TIME!!!
Please remember that out of 535 elected officials in Congress, there’s only a HANDFUL or LESS that’s been serving for the best interest of the majority of the people!!! How PITIFUL is that? IT’S PAYBACK TIME!!!
#WeThePeople #UnchainedUs #LegalizeFreedom
Collateralized debt obligation (CDO) explains...
European Debt Crisis Explained
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YouTube Link
Spain's debt costs are rising and some fear the nation may soon need a full-scale bailout. Sr. Producer Paddy Hirsch explains the big problem with Spain, using a housing analogy.
Why is Spain causing so much pain?
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Why is Spain causing so much pain?
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Now the Federal Reserve has effectively cut the target lending rate to zero, it only has one more weapon in its arsenal. Quantitative easing. Senior Editor Paddy Hirsch explains what this nuclear option it is, and what the Fed hopes itll do.
Quantitative Easing
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Quantitative Easing
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Leveraging or borrowing has been cited as one of the contributors to the financial crisis. Senior Editor Paddy Hirsch explains how the move to deleverage or reduce debt is prompting wild market swings and concerns about deflation.Leveraging and
Deleveraging
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Deleveraging
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Hedge funds used to occupy a dark, undisturbed corner of the financial world, but over the last year theyve been thrown under the spotlight. Still, many people dont know exactly what hedge funds are, or what hedging actually means.
Senior Editor Paddy Hirsch explains.
A Look Inside Hedge Funds
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Senior Editor Paddy Hirsch explains.
A Look Inside Hedge Funds
YouTube Link
Today's word of the day is Credit Default Swap or CDS. What a credit default swap really is is an insurance contract. What does it insure? Well it depends. During the crisis of 2008, we heard a lot about these default swaps in reference to AIG and the mortgage market (along with CDO's). Now, CDS are being used to insure bondholders against the default of countries in Europe, like Greece and Italy. Lauren breaks it down for our audience.
Word of the Day: Credit Default Swap
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Word of the Day: Credit Default Swap
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Given our discussion about MF Global with James Koutoulas, the word of the day is Safe Harbor. So what exactly is Safe Harbor?
Safe Harbor protections in the Bankruptcy Code include:
Provisions that protect nondebtor counterparties from the normal course in bankruptcy. Many transfers of cash or securities made in the final weeks before a bankruptcy, for example transfers used to meet margin calls on OTC derivatives, are not subject to clawbacks, as long as the parties involved claim they had no knowledge of fraud.
Let's take a look at one of the ways it has been used: In the case of MF Global, when more than 1.6 billion dollars of customer money went missing from customer accounts, one would assume that the money would go back to the customers once properly discovered right? Not necessarily under the safe harbor provisions. Companies that received hundreds of millions in transfers of MF Global customer funds in their final days may simply get to keep that money! And they would be within their legal right to do so! Also, any collateral MF Global posted with counterparties before the bankruptcy, those counterparties may get to keep! These assets are beyond the reach of creditors.
This would be as if you bought a car you didn't know was stolen, and when the owner of the car came to take back the car, the Safe Harbor would be used to protect you from having to return the car to its rightful owner. So, unlike what would happen to ordinary citizens outside of their dealings with banks, creditors and customers can sail into safe harbors when they are dealing with stolen assets by saying they didn't know they were stolen.
The Safe Harbor provisions are supposedly intended to avoid a financial ripple effect, where a large firm's bankruptcy infects the market as a whole by providing immunity to other market entities. However if counterparties are not incentivized to perform due diligence on each other, and instead rely on the ability to liquidate the other's collateral upon bankruptcy, a large counterparty failure easily leads to a fire sale of all posted collateral. So much for the systemic risk argument!
The provisions were first introduced into the Bankruptcy Code in 1982, in a very limited manner, safe harbors have since been expanded over the years, most recently in 2005 as part of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). The 2005 act extended safe harbor provisions to include repo and swap agreements, in addition to futures contracts and securities agreements.
And who were some of the biggest lobbyists for this act? Bank of America, CitiGroup, JP Morgan, Merrill Lynch, and the American Banker's association. These 5 entities spent over 6 million dollars to get this bill passed. The poorly named Bankruptcy Abuse Prevention and Consumer Protection Act arguably neither prevents abuse nor protects consumers. And the big losers today may be customers who are trying to recover funds such as those at MF Global that sunk with the ship and are in a so called safe harbor. And now you know what it is.
Word of the Day: Safe Harbor
YouTube Link
Safe Harbor protections in the Bankruptcy Code include:
Provisions that protect nondebtor counterparties from the normal course in bankruptcy. Many transfers of cash or securities made in the final weeks before a bankruptcy, for example transfers used to meet margin calls on OTC derivatives, are not subject to clawbacks, as long as the parties involved claim they had no knowledge of fraud.
Let's take a look at one of the ways it has been used: In the case of MF Global, when more than 1.6 billion dollars of customer money went missing from customer accounts, one would assume that the money would go back to the customers once properly discovered right? Not necessarily under the safe harbor provisions. Companies that received hundreds of millions in transfers of MF Global customer funds in their final days may simply get to keep that money! And they would be within their legal right to do so! Also, any collateral MF Global posted with counterparties before the bankruptcy, those counterparties may get to keep! These assets are beyond the reach of creditors.
This would be as if you bought a car you didn't know was stolen, and when the owner of the car came to take back the car, the Safe Harbor would be used to protect you from having to return the car to its rightful owner. So, unlike what would happen to ordinary citizens outside of their dealings with banks, creditors and customers can sail into safe harbors when they are dealing with stolen assets by saying they didn't know they were stolen.
The Safe Harbor provisions are supposedly intended to avoid a financial ripple effect, where a large firm's bankruptcy infects the market as a whole by providing immunity to other market entities. However if counterparties are not incentivized to perform due diligence on each other, and instead rely on the ability to liquidate the other's collateral upon bankruptcy, a large counterparty failure easily leads to a fire sale of all posted collateral. So much for the systemic risk argument!
The provisions were first introduced into the Bankruptcy Code in 1982, in a very limited manner, safe harbors have since been expanded over the years, most recently in 2005 as part of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). The 2005 act extended safe harbor provisions to include repo and swap agreements, in addition to futures contracts and securities agreements.
And who were some of the biggest lobbyists for this act? Bank of America, CitiGroup, JP Morgan, Merrill Lynch, and the American Banker's association. These 5 entities spent over 6 million dollars to get this bill passed. The poorly named Bankruptcy Abuse Prevention and Consumer Protection Act arguably neither prevents abuse nor protects consumers. And the big losers today may be customers who are trying to recover funds such as those at MF Global that sunk with the ship and are in a so called safe harbor. And now you know what it is.
Word of the Day: Safe Harbor
YouTube Link
Back by popular demand, in Word of the Day we break down a financial term for our smart viewer but maybe not the financial expert. Given the hype and disappointment surrounding Facebook's IPO, it's herd mentality. Herd mentality is used in finance. It describes how people are influenced by their peers to adopt certain behaviors and follow certain trends. It is the observable tendency of people to conform to what the group is thinking or doing, irrespective of their own instincts.
Psychological experiments, most notably the Asch conformity experiments published in the 1950s have been conducted in order to demonstrate this behavior. These lab studies showed how subjects, when given a test within a group, even though they know the correct answer, actually give the wrong answer to conform with the incorrect answers of the group. In other words, they would rather be wrong with lots of other people, than right alone.