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Could 10:1 be the new leverage in US Forex?

  • #601
  • Edited 4:40am Feb 20, 2010 4:24am | Edited 4:40am
i thought some of you might enjoy this documentary that provides a little history on the regulation of the otc derivatives market...

http://video.pbs.org/video/1302794657/

....it is not at all hard to see how the CFTC might seek to take what may be considered an overly proactive approach to otc market regulatory reform after seeing how stridently it was restrained by Greenspan et al.

I need to find the video clip of Greenspan admitting before congress that he was fundamentally wrong - that the "free" markets can not be trusted to regulate themselves after all...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #602
  • Feb 20, 2010 4:48am Feb 20, 2010 4:48am
aah here it is....

Inserted Video
"If The Fool persists in his Folly he will become wise." - William Blake
  • #603
  • Feb 20, 2010 6:47am Feb 20, 2010 6:47am
Quoting The Fool
i thought some of you might enjoy this documentary that provides a little history on the regulation of the otc derivatives market...

http://video.pbs.org/video/1302794657/
Excellent program. Puts the whole political background into perspective.
  • #604
  • Edited 12:16pm Feb 20, 2010 11:54am | Edited 12:16pm
Quoting The Fool
i thought some of you might enjoy this documentary that provides a little history on the regulation of the otc derivatives market...

http://video.pbs.org/video/1302794657/

....it is not at all hard to see how the CFTC might seek to take what may be considered an overly proactive approach to otc market regulatory reform after seeing how stridently it was restrained by Greenspan et al.

I need to find the video clip of Greenspan admitting before congress that he was fundamentally wrong - that the "free" markets can not be trusted...
Thanks for a good program...hmm....I watched it and never heard anything about FX causing a crisis...it talks about credit default swaps, which are insurance policies...if the insured makes a claim, and the insurance co. fails, then Houston, we have problem.

On the other hand retail FX is harmless...but Gensler want to regulate that, and not only fraud...but also the actual amount of leverage...and the proposal exempts "financial institutions", which were the culprits in the credit default swaps in the first place...go figure. They are throwing the baby out with the bath water, but wait, nobody is taking a bath, they are exempt...they are only throwing out the baby, who is too small and scared to fight.

It's not the OTC nature that caused the problem, but the underlying instrument, insurance contracts that could not pay up the claims. This has nothing to do with Forex or OTC markets in general.

Look at the program...and see about Greenspan, Gensler and the rest of the regulators in action...as I said earler, big brother is not your friend
  • #605
  • Feb 20, 2010 1:21pm Feb 20, 2010 1:21pm
Read this, kiddies, and ask yourself why, when they aid and abet these criminals, do they come after small potatoes like the FX retail market....

Warning: rough language for those of you with delicate sensibilities....


http://www.rollingstone.com/politics...t_hustle/print
Scarlett
  • #606
  • Edited 3:16pm Feb 20, 2010 2:37pm | Edited 3:16pm
Quoting Scarlett
Read this, kiddies, and ask yourself why, when they aid and abet these criminals, do they come after small potatoes like the FX retail market....

Warning: rough language for those of you with delicate sensibilities....


http://www.rollingstone.com/politics...t_hustle/print
Of course, they buy puts or whatever will go up when the crash occurs, and they then presipitate the crash, only now they bought the puts with your money...but that is not worse part...the worse part is that the public either does not believe it, or does nothing about it.


"Less than a week after the AIG bailout, Goldman and another investment bank, Morgan Stanley, applied for, and received, federal permission to become bank holding companies — a move that would make them eligible for much greater federal support. The stock prices of both firms were cratering, and there was talk that either or both might go the way of Lehman Brothers, another once-mighty investment bank that just a week earlier had disappeared from the face of the earth under the weight of its toxic assets. By law, a five-day waiting period was required for such a conversion — but the two banks got them overnight, with final approval actually coming only five days after the AIG bailout."

Is nice to have a good old Goldman boy as the secretary of the treasury is it not? an now another Goldman boy is at the helms of the CFTC, the whole story is repeating itself.

"Say you're working for the commodities desk of a big investment bank, and a major client — a pension fund, perhaps — calls you up and asks you to buy a billion dollars of oil futures for them. Once you place that huge order, the price of those futures is almost guaranteed to go up. If the guy in charge of asset management a few desks down from you somehow finds out about that, he can make a fortune for the bank by betting ahead of that client of yours. The deal would be instantaneous and undetectable, and it would offer huge profits. Your own client would lose money, of course — he'd end up paying a higher price for the oil futures he ordered, because you would have driven up the price. But that doesn't keep banks from screwing their own customers in this very way."

Yes sir, OTC must be regulated by the CFTC, that way Goldman and the good old boys know who wants to buy or sell what before the order is actually executed. That's what Gensler calls the need for "transparency".
"The scam is so blatant that Goldman Sachs actually warns its clients that something along these lines might happen to them. In the disclosure section at the back of a research paper the bank issued on January 15th, Goldman advises clients to buy some dubious high-yield bonds while admitting that the bank itself may bet against those same shitty bonds. "Our salespeople, traders and other professionals may provide oral or written market commentary or trading strategies to our clients and our proprietary trading desks that reflect opinions that are contrary to the opinions expressed in this research," the disclosure reads. "Our asset-management area, our proprietary-trading desks and investing businesses may make investment decisions that are inconsistent with the recommendations or views expressed in this research.
To help them screw their own clients, the major investment banks employ high-speed computer programs that can glimpse orders from investors before the deals are processed and then make trades on behalf of the banks at speeds of fractions of a second. None of them will admit it, but everybody knows what this computerized trading — known as "flash trading" — really is. "Flash trading is nothing more than computerized front-running," says the prominent hedge-fund manager. The SEC voted to ban flash trading in September, but five months later it has yet to issue a regulation to put a stop to the practice."

and you still say regulation is not so bad? Yes, transparency is good, but only for Goldman and the likes. Please!!!!
  • #607
  • Feb 20, 2010 3:28pm Feb 20, 2010 3:28pm
Quoting wwwin

On the other hand retail FX is harmless...but Gensler want to regulate that, and not only fraud...but also the actual amount of leverage...and the proposal exempts "financial institutions", which were the culprits in the credit default swaps in the first place...go figure.

It's not the OTC nature that caused the problem, but the underlying instrument, insurance contracts that could not pay up the claims. This has nothing to do with Forex or OTC markets in general
It really is quite unfathomable isn't it? The financial institutions who pushed the capitalist envelope and brought us all undone, were rescued by breath-taking largesse from the public purse. But it is the public they now want to punish? While the big end of town (where all the problems are in terms of transparency and fraudulent activity) just continues on it's merry way.

Pardon the language, but its just un-f*cking believable that they have had the audacity to treat ordinary people like this while their mates who created the problem continue to escape any kind of scrutiny. Outrageous and extraordinarily offensive barely covers it.
  • #608
  • Feb 20, 2010 3:43pm Feb 20, 2010 3:43pm
The fox (Gensler) is in charge of the hen house. How much more crazy can this get? Mind boggling.

Hope the FXDC crew have their off-shore arrangements stitched up and ready to launch. This isn't going to end well.
  • #609
  • Feb 20, 2010 4:39pm Feb 20, 2010 4:39pm
Quoting wwwin
Thanks for a good program...hmm....I watched it and never heard anything about FX causing a crisis...it talks about credit default swaps, which are insurance policies...if the insured makes a claim, and the insurance co. fails, then Houston, we have problem.

On the other hand retail FX is harmless...but Gensler want to regulate that, and not only fraud...but also the actual amount of leverage...and the proposal exempts "financial institutions", which were the culprits in the credit default swaps in the first place...go figure. They are throwing...
baby out with the bathwater....hmmm...."sacrificial lamb" comes to mind....also maybe "bait and switch" ? or "smokescreen" ...?

I thought it (Frontline show "The Warning") was useful in that it shows where Gensler comes from, who his people are, all have everything to do with where we are now....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #610
  • Feb 20, 2010 7:09pm Feb 20, 2010 7:09pm
"I know of no set of supervisory actions we can take that will prevent people from making dumb mistakes...I know of no piece of legislation that can be passed by the congress which would require us to prevent them from making dumb mistakes" -Alan Greenspan

Greenspan is right. These dumb ass companies invested in derivatives that they didn't understand and were very risky. They as the free market system dictates they should go out of business. caveat emptor. If you dont understand the risk involved with an investment your a weaker prey and you should get your ass handed to you.

Viva la free market system. HOORAY Deregulation.
  • #611
  • Feb 20, 2010 7:44pm Feb 20, 2010 7:44pm
FYI -- if you go with a broker outside the US, don't forget the FBAR -- if you have $10,000 or more in aggregate in foreign accounts you have to tick a very small box on your 1040 and file a separate form with the Treasury Dept (FBAR, and the form is TD 90 22). It's like if at any time during the year the balance of all foreign accounts combined was over $10,000 you have to file this form. It's always confusing to fill out, and not very well known. And, if you don't file it, they can impose fines.
  • #612
  • Feb 20, 2010 8:08pm Feb 20, 2010 8:08pm
Democratic free societies and the capitalist free market system are premised on the existence of the rule of law that limits boundaries and penalizes excursions beyond those boundaries in all aspects of human existence. Without the rule of law, democratic free societies could not exist.

There is a fine balance however between adequate laws to ensure fair play, equitable participation for all, while penalizing those criminals who seek to operate outside the boundary of just dealings.

The incestuous nepotism of the Wall St inner circle and the stupidity of Congress to allow these same self-serving kindgom builders to continue ruling the day even after such catastrophic events, says it all.

This is an inner sanctum crowd who truly believe in their right of entitlement to live beyond the laws that govern the rest of us and who prey upon the ignorance of Congress and what they think are the "stupid" masses.

Congress has to STOP rewarding bad behaviour.
  • #613
  • Feb 20, 2010 10:01pm Feb 20, 2010 10:01pm
I agree. Im not a hippie or saying that government shouldn't exist but to only to help right inefficiencies where normal individuals dont have the power or resource.

Free markets and capitalists they are going to exploit weakness until it doesn't exist anymore. Free market systems are self regulating just like nature. The system survives, strong and intelligent profit and the weak die or rather go to the poor house.

The concept of fairness is a human emotion. The natural world has no concept of fairness. Society beleives things should be fair and just but the reality is sometimes the world just isn't like that.

Education on risk is the only way to keep our investing freedom and free market system as profitable as possible. There are just TOO many people who don't understand risk or anything about investing mediums.
  • #614
  • Feb 21, 2010 12:40am Feb 21, 2010 12:40am
There's a lurking concern that the thoroughly obnoxious spoilt child (aka the Wall St inner sanctum on a quest to garner the universe for their own pet indulgences) is going to unravel in grand style at some point. There's something intrinsically wrong about Mom n Dad (govt) mortgaging the house and everything else they own (or might ever own for 4 generations to come) just to bail out the evil child. Is the kid going to do it all again because they now know for certain they can get away with it? Hell yes.

These guys must be laughing all the way to the bank. Actors on a stage. Sociopaths. All rather bizarre, like watching some kind of hideous side-show unfolding.... I mean really, what a collosal hide these guys have to exempt their institutional mates, when they are the very ones who MUST be monitored religiously.

If Congress doesn't get this round of OTC CFTC regulations right, the US will be an even greater laughing stock than it already is.
  • #615
  • Feb 21, 2010 1:16am Feb 21, 2010 1:16am
Quoting The Fool
baby out with the bathwater....hmmm...."sacrificial lamb" comes to mind....also maybe "bait and switch" ? or "smokescreen" ...?

I thought it (Frontline show "The Warning") was useful in that it shows where Gensler comes from, who his people are, all have everything to do with where we are now....
Of course it is useful, I am not saying that b/c it didn't mention FX that it is not useful...just saying it to show how ridiculous this whole retail fx reg is.
  • #616
  • Edited 1:29am Feb 21, 2010 1:18am | Edited 1:29am
Quoting Jade Gate
There's a lurking concern that the thoroughly obnoxious spoilt child (aka the Wall St inner sanctum on a quest to garner the universe for their own pet indulgences) is going to unravel in grand style at some point. There's something intrinsically wrong about Mom n Dad (govt) mortgaging the house and everything else they own (or might ever own for 4 generations to come) just to bail out the evil child. Is the kid going to do it all again because they now know for certain they can get away with it? Hell yes.

These guys must be laughing all the way...
I am afraid that you are 100% correct...this is not going to end well, maybe not right away but soon enough...my account is out of here as of friday's closing time...I am a least getting a temporary relief from this madness...but I am still concerned as to how predatory they want to get...there are letters from Gensler to Congress indicating that the OTC Act must contain provisions forcing foreign trade boards to register with the CFTC if they allow US clients to open accounts in their jurisdiction ...now that is really scary stuff.
  • #617
  • Feb 21, 2010 1:27am Feb 21, 2010 1:27am
Quoting Scarlett
Read this, kiddies, and ask yourself why, when they aid and abet these criminals, do they come after small potatoes like the FX retail market....

Warning: rough language for those of you with delicate sensibilities....


http://www.rollingstone.com/politics...t_hustle/print
Looking at the history of Wall Street several hundred years, we can see that this is nothing new or even comparatively egregious. For instance, Aaron Burr, who was Vice President wanted to start a bank but the New York city was reluctant to give him a charter. So he scammed them by telling them he was going to build a water company and at the very last moment threw in some ambiguous fine print that gave him the capability to start a bank, which today is known as Chase.

This is America. The freewheeling Wild West atmosphere is what makes it interesting, especially for those who want to make a fortune. I'm not condoning lying or stealing, but my God, is this really a surprise?!
  • #618
  • Feb 21, 2010 1:55am Feb 21, 2010 1:55am
Quoting Lionstrike
Looking at the history of Wall Street several hundred years, we can see that this is nothing new or even comparatively egregious. For instance, Aaron Burr, who was Vice President wanted to start a bank but the New York city was reluctant to give him a charter. So he scammed them by telling them he was going to build a water company and at the very last moment threw in some ambiguous fine print that gave him the capability to start a bank, which today is known as Chase.

This is America. The freewheeling Wild West atmosphere is what makes it interesting,...
http://en.wikipedia.org/wiki/Chase_(bank)

"Chase traces its history back to the founding of The Manhattan Company by Aaron Burr on September 1, 1799, in a house at 40 Wall Street:[1]

After an epidemic of yellow fever in 1798, in which coffins had been sold by itinerant vendors on street corners, Aaron Burr established the Manhattan Company, with the ostensible aim of bringing clean water to the city from the Bronx River but in fact designed as a front for the creation of New York's second bank, rivaling Alexander Hamilton's Bank of New York.
—The Economist[4]

In addition to being fierce political and personal rivals, Aaron Burr and Alexander Hamilton competed in business, with Burr's Bank of the Manhattan Company competing against Hamilton's Bank of New York. In 1804, their rivalry erupted into a duel, leading to the death of Alexander Hamilton. The dueling pistols are owned by the successor company of Chase Manhattan. They are currently on display on the executive conference floor of the JP Morgan Chase building at 277 Park Avenue in New York City."

Good one. No, none of this eastcoast blueblood bullshit surprises me anymore.

If you don't go to the same prep schools, Ivy League colleges, top tier Business schools, and exclusive country clubs as they do, don't have the same pedigree, then they don't give a shit about you, will send you and your offspring off to foreign wars to bleed and die so that the "national interests" (that is, the interests of the corporate oligarchy) are protected, and will hook your feeble mind into the "bravo free market capitalism! hooray deregulation!" lies through all the mass media that they own and use without cease to keep you stupid forever.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #619
  • Feb 21, 2010 2:19am Feb 21, 2010 2:19am
Quoting wwwin
I am afraid that you are 100% correct...this is not going to end well, maybe not right away but soon enough...my account is out of here as of friday's closing time...I am a least getting a temporary relief from this madness...but I am still concerned as to how predatory they want to get...there are letters from Gensler to Congress indicating that the OTC Act must contain provisions forcing foreign trade boards to register with the CFTC if they allow US clients to open accounts in their jurisdiction ...now that is really scary stuff.

As strategy goes, it's rather transparent. Shift blame to the OTC market in its entirety, use the political onslaught to further garrison your own control for your own purposes, then enjoin and expand your power base internationally so you have absolute control of everything... then plunder and pillage, doing it all again with guaranteed immunity.

The lights must be out on Capitol Hill.
  • #620
  • Feb 21, 2010 5:12am Feb 21, 2010 5:12am
From Opie quoting Matt Taibbi (rolling stone)

"Damn near anything written by Matt Taibbi is worth a look. He once (in)famously described Goldman Sachs as the "great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money."

http://www.forexfactory.com/news.php?do=news&id=221808
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