Credit Default SCAMS brought to you by our Wall Street pals

http://www.wallstreetsux.com/blog/?p=13
Credit Default SCAMS brought to you by our Wall Street pals

Posted by David on May 22, 2010
Let’s say you hate your boss, you buy life insurance on him, a million bucks, then you shoot his nasty ass, get away with it, collect a mil, nice, no? Well, maybe, but it can’t happen. That’s because you do not have an INSURABLE INTEREST in your boss. He ain’t you, he ain’t supporting you, there’s no connection besides the fact that you don’t like him so the law does not allow you to buy life insurance on him, simple, right?

Yeah, too simple. So simple, in fact, that the Wall Street gang knew they had to get around that law when they created Credit Default Swaps, which are insurance, plain and simple. If they were called insurance, which they are, anyone issuing them would have been required to have enough cash on hand to back those “policies” up. Wall Street knew that if they called it insurance they’d have to require that cash from purchasers, which would not be great for business. Tough to sell a product requiring the customer to keep a pile of cash in reserve “just in case”. So Credit Default Swaps were created which are really bets that the credit a company has will, well, default, pretty simple.

So, let’s call it what it really is, a wager that a company is going go south, bankrupt or at least into lousy condition, the lousier the better for the owner of those swaps. You, if you’re the purchaser, are buying an interest in a company going down the tubes. Isn’t that nice? Isn’t that just the American (at least the Wall Street of America) way?

Let’s not confuse this with selling a stock short. That’s a different animal, at least you are possibly counteracting overvalued securities, which sort of keeps the market humming and the marketeers honest (or as honest as they can be which, let’s face it, ain’t all the sweet). No, Credit Default Swaps are greed, pure and simple, and some companies deemed “too big to fail” covets them like my nine year old covets Twizzlers. AIG, a group of geniuses who were supposed to be insuring everything from from homes to ships to lives to Credit Default Swaps, peddled them like cigarettes to soldiers at war, pressing them onto the world and making major big bucks until it suddenly all went down the tubes.

What happened? Well, all those companies who’s credit was being bet on to default, defaulted. And who was holding the bag after selling all those swaps? Well, AIG, American International Group, those high and mighty insurers of the world except THESE SECURITIES WERE NOT INSURED! So slowly down the tubes did AIG float until YOU bailed them out. And now they might just need more, they are doing none too well, have paid back less than a fraction of what they borrowed and probably never did.

The upside is that you now own a piece of this behemoth. Try using that to get yourself a seat at the corner office. Or even entry into the building. See how far it gets you.

Get OUTRAGED PEOPLE, they are pulling the wool over your eyes, they are telling you they are regulating, that things are getting better, that we’ll be back on top of the world any day now, just leave the government and Wall Street to work it out.

We know where that has gotten us before, we know where it’ll get us again.

WALLSTREETSUX! Buy a magnet, buy a tee shirt, go to the website and make a statement before it is too late.