How in the Hell can these MULTI-BILLION DOLLAR HEDGE FUNDS GET OFF SCOTT FREE FOR MAKING A BAD BET!
THIS IS GOING TO BE 2009 ALL OVER AGAIN!!!!!
These are suppose to be the most sophisticated and smartest investors in the world and they have one bad week and lose everything and they claim they need help because the small guy just out smarted them?
AMERICA IS SO FUCKING DONE WITH THIS SHIT!
But that's not the nature of options or credit default swaps. I can't insure a house I don't own. I cannot insure it for more than it is worth. In particular, I cannot insure your house 100 times over and come around and play with matches.
I'm not saying you can't gamble with them, I'm just saying they aren't for "merely gambling". You can use a car as a weapon, it doesn't mean it's a weapon.
And markets are different than home insurance. I really don't see why you can't buy insurance contracts from an open market to hold in case someone wants to buy. You're basically playing broker.
Remember credit default swaps? That's the purest "insurance" style instrument. Not only could you (and still can) sell more CDS than you can back with anything (if the insurance policy happens, it is impossible to claim it because the counter-party is dead); you can also buy insurance for things you don't own. There was 60 trillion of this garbage in 2008, more now. It nearly imploded the world economy and you the tax payer were on the hook for trillions to prevent the nuke from going off.
I have no idea on the regulation for Credit Default Swaps.
I'm talking about Options and you can't sell an infinite amount of Option contracts. You need Cash, Collateral, and/or Margin to base the amount of contracts you can sell. I can't sell a million dollars worth of contracts and only have an account size of 10,000$.
They shouldn't have bailed out private corporations with Public money.
"I have no idea on the regulation for Credit Default Swaps." - There is none
"I'm talking about Options and you can't sell an infinite amount of Option contracts. You need Cash, Collateral, and/or Margin to base the amount of contracts you can sell. I can't sell a million dollars worth of contracts and only have an account size of 10,000$."
That's not true of CDSs. And for the less idiotic options trading you're still enabling pure gambling and claiming it aids in price discovery and liquidity when it's 90% robots engaged in a battle of high-frequency-stealing of a few cents here and a dime there. If there is ever volatility that volume goes to nothing; the robots are only doing their bullshit when things are predictable; it's fake volume. There's also the issue of naked shorting, which is selling something you don't even have. "Market makers" get this priviledge because it's never supposed to last a long time and it facilitates trades; but they can and do use their position as "market maker" to gamble and they are not properly firewalled off from hedge funds. This may well be what happened here.
"They shouldn't have bailed out private corporations with Public money." - They didn't have a choice. Wallstreet had rigged up a 60 trillion dollar nuclear bomb and nobody knew where the trigger for the bomb would turn out to be. Heads I win, tails you lose. Too big to fail should have resulted in too big to exist; dismantled into little pieces and CDSs invalidated.
This is the PERFECT analogy.