CO2 Trading Business Is 100% Fraud

Gamblers hoping to see into the future so they can always win are killing off the vultures in Africa because they hope this will give them magical powers to see deep into the Cave of Wealth and Death.  This horrifies me was well as irritates me.  The vultures have zero interest in life and wealth. They are strictly interested in dead things.  Speaking of dead things, it turns out that Europe’s attempts at carbon trading is leading up to perhaps 90% fraud.  No surprise to me.  The entire concept is pure fraud.

Vultures face extinction as gamblers seek visions of the future | Environment | guardian.co.uk

It’s a tiny organ that, the superstition goes, holds the secrets of the future. When smoked and inhaled, the brain of a vulture is said to confer the gift of premonition. To put it bluntly, most users hope to sneak a look at next week’s national lottery numbers.

.

Such is the demand for vulture brains to use in muti – traditional medicine – that wildlife experts fear the birds could be driven to extinction within two or three decades. They also warn that hunting could intensify as gamblers seek an advantage when betting on the football World Cup in South Africa.

.

Vultures’ acute vision, and ability to find prey, has kindled a belief that they possess clairvoyant powers. Their brains are dried and rolled into a cigarette or inhaled as vapours in the hope they will bring a vision of the future – including lottery numbers and sports results.

ΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩ

I am not surprised to see that humans can’t understand the ultimate powers of the Cave of Wealth and Death.  When I designed artwork showing the mythological entrance to this odd place which happens to be the deeper and darker parts of our subconscious brains, I chose a saying for the lintel of this tomb: ‘Wish Upon A Star’.  This is because we want our wishes to come true.

ΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩ

Using various forms of complimentary magical connections, we hope to somehow gain the powers to see what the ‘gods’ see: the future.  The horrible idea, which I firmly believe is reality, that the only thing we can see in the future is death, people hope and pray that we can see the future in order to gain power and live an easy life.  All mythological beliefs of the dim past (unlike modern myths) agree that anyone who tries to peer into the future to get rich, will be punished by the ‘gods’ of various sorts.

ΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩ

Those humans who really do see the future can only warn people about follies and death and thus, like Cassandra, are not loved but hated and feared.  And as I keep saying, no one really likes to listen to us futurist vultures!  My blog, despite having cartoons and some faint humor, always fails to please when I issue warnings about deadly things.  Worse, when I do explain life and death matters, the fury rises but I don’t care.  This is because I have more sympathy with vultures than the average person trying to see into the future.  I understand the vulture fascination with corpses.

ΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩ

One thing I have sought to kill off, by the way, is the stupid and very Cave of Wealth and Death-ish business called the carbon derivatives market.  That is, all derivatives are extremely dangerous and are very much attached to this monster we call ‘Death’ and is very intent on destroying all energy systems, not build them.  My warnings are seldom heeded, of course.  But here is yet another shot at this insane market in invisible infinite entities, the CO2 business:

ΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩ

‘Carousel’ frauds plague European carbon trading markets – Telegraph

It is a building site, formerly a derelict car park, in a deprived part of West London, where the neon glow of curry houses and late-night grocery stores could not be further from the wealth and glamour of London’s financial markets. Described as a “consulting” business, this is the address of a UK company that has signed up to trade carbon permits under the European Emissions Trading Scheme in Copenhagen. But there is no trace of its existence on the Companies House database….

.

I love invisible things.  The carbon trading market is all about invisibility.  All the entities deep inside the Cave of Wealth and Death are invisible.  Death, of course, is very invisible.  We can see the side effects of death, the bodies, the blood, the inertia.  But we can’t see Death, itself.  We only see it when we die.

.

This is very shocking to humans who evade this reality by making up gods who rescue us from Death in various tricky ways.  We pay homage to these gods and pray that they will not kill us but kill other humans we dislike or we beg them to make us rich.  Anything invisible created by humans ends up causing DEATH.

.

JRR Tolkien was correct about the Ring of Power: it made the holder not only invisible but able to see the invisible!  And with this horrible ring, they could use invisibility to take over the visible in key ways, in the most spectacular way, by murdering others and getting away with it.

.

This is an object lesson to us all: invisible=death.  Anything that is infinite also equals death!  Also, the Easy Road always leads to Hell while the Hard Path leads to Heaven.  That is, work leads to true moral uprightness and prosperity while funny money making always destroys workers and their families and leads to gambling, immoral behavior and addictions.

.

…It is not the only oddity to emerge from the Danish Carbon Registry. All the expected big players are on the list – utilities, oil and heavy industry – the only sectors obliged by law to own permits to cover emissions….But outnumbering these familiar names, hundreds of UK companies selling anything from hair loss treatments to electronics have mysteriously registered to buy and sell carbon permits in the Scandinavian nation – mostly in the last 18 months….

.

This is all about the Emperor’s New Clothes which were, of course, invisible.  As I predicted…CORRECTLY…the carbon trading operation is fundamentally a con game.  All the derivatives markets became fraudulent just as the non-capitalized lending by bankers was also fundamentally fraudulent thanks to their quasi-illegal CDO trading derivatives insurance markets.

.

…According to sources, the Danish registry may be at the heart of Europe’s problems with carbon trading fraud. Local media has repeatedly raised the fact that few, if any, checks are done on new traders and approval can be much quicker than in other countries. Criminals profit by importing goods VAT-free, selling them through a series of companies, each liable to VAT, before exporting them again. Then, the first link in the chain often goes missing without accounting for the VAT and the final link reclaims the VAT it has paid from the state before disappearing

.

I highlight the key words here: disappearing, invisible, no checks, vanishing, intangible. We see these words again and agin in this excellent expose by the Telegraph, an English newspaper. Unlike most economic and political analysts, I happen to be very interested in invisible, intangible things. This is very much due to being hit by lightning when I was a child.

.

I suddenly was plunged into this electrical universe where up is down and in is out. That is, the two poles, negative and positive, are activated violently. Our brains operate via electrical charges moving information in the form of thoughts and impulses and being hit by lightning does considerable chaos to this system. This is how I discovered the Outer Darkness which happens to be inside of our own brains but are not individual but shared by all humans via time and evolution.

. …Just a few weeks ago, Europol, the cross-border police force, said that carbon trading fraudsters may have accounted for up to 90pc of all market activity in some European countries, with criminals mainly from Britain, France, Spain, Denmark and Holland pocketing an estimated €5bn (£4.5bn)….

.

Criminals love the invisible as well as the unknowable. They restlessly probe systems to find flaws and weaknesses and then ruthlessly exploit these for their own profit. They are destroyers. Note how the biggest bankers on earth are all criminal operations! They seek out glitches in controls and they destroy any barriers preventing them from running systems to infinity. They need to commit these crimes because it makes them richer even though they can see that the hard working people who are moral are being destroyed by all of this. They just don’t care. They want to get rich quick via magical systems.

.

…Carousel fraud has been a known scam for years among mobile commodities, such as phones, computer chips and cigarettes. But the attraction of carbon permits is their intangible nature, so there is no need physically to ship goods across borders. All is done at the click of a mouse….

.

EXACTLY!  I am so happy I am not the only person to notice all of this!  Yes!  And once again, a prediction I made a long time ago, back when I figured out what the carbon trade scam really was all about, as well as my predictions about the Derivatives Beast, prove to be 100% correct!  Hooray for me and my vulture Watchers!

.

…It now looks like Europe will start a so-called “reverse charge” mechanism, which would remove the need for VAT to change hands between carbon traders every time permits are sold. But will this remove all problems from the system? It should certainly eradicate VAT fraud, but the very nature of carbon credits makes them “an incredibly lucrative target for criminals“, Rafael Rondelez, who was involved with the Europol investigation, has warned.


ΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩ

Making predictions and seeing them come true is wonderful, isn’t it?  I  have a sterling record for seeing into the future.  Does this make me wildly popular or wildly unpopular?  HAHAHA.  Way back, in childhood, I was warned in the Dream World that every time I told the truth or predicted the future, I would be attacked and instead of seeing seas of love, I would be left in the desert of hatred.  No one would like me at all.

ΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩ

For some insane reason, I persist.  This is because the pain of seeing the future should be shared.  I don’t like seeing the future and not letting everyone know it beforehand because when the future becomes the present, I still suffer anyway. It is very painful, I assure everyone.  So I do this blog for my own self, not for others.  Anyone who wishes to join me, may.  But I warn everyone: this is not a fun place to go when I am in the mood to predict the future.

ΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩ

The future of carbon trading is the death of all of Europe and the US.  Totally, like freezing to death and unable to even access simple fuels to stay alive.  Take this prediction or leave it.  I simply issue obvious warnings because I don’t like seeing people die.  Now, many humans have magical spells and systems and beliefs they imagine will save them from the Future.  But this always fails if they are also Wishing Upon A Star instead of staring straight into the faces of the denizens who live in the Cave of Wealth and Death.

ΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩ

One entity that dwells at the very entrance of this Cave is Libra, the ancient concept of balance and justice.  We can fool each other, we can fool ourselves but we can’t fool Libra.  She is Physics.  She is the guardian of the Laws of Nature.  Conservation of Energy is one of the laws she upholds with grim fierceness.  The Law of Gravity is another.  And above all, forbidding all things in the real world of nature and the universe from going to Infinity is another iron rule.  That is, all infinite things suddenly, like lightning, reverse to Zero.  Which is Annihilation/Death.

So, on to another story at Time magazine which has this poor man who is an economist, struggling to understand how gold works.  He is smart enough to know that if we find a gold hoard, the value of gold will drop.  But he doesn’t understand how gold restricts credit and thus, prevents systems from running to infinity and of course, the destruction of the value of all things, driving systems into bankruptcy and death.

ΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩ

A critique of Ron Paul’s ‘End the Fed’ – The Curious Capitalist – TIME.com

After being urging to do so by several readers, I finally read Ron Paul’s End the Fed. I was about to buy it for the Kindle I got for Christmas, but when I got to work Monday morning there was a package in my mailbox from Gary Howard at Paul’s Campaign for Liberty with two copies of the book. I gave one to my colleague Stephen Gandel, and started reading the other. I had told Hunter Lewis that I was going to read his Where Keynes Went Wrong first, but when I saw how short End the Fed was (and how few words per page it contained) I figured I could finish it in a couple of hours. It took about three, and it was worth the time and effort. I didn’t learn anything new about monetary economics or the Federal Reserve, but I did learn a lot about the thinking of Ron Paul. It turns out to be a curious mix of the sensible and the delusional. To put it differently, Paul has wrapped a mostly cogent critique of central banking in general and the Fed in particular inside a decidedly utopian view of what a world without central banks would look like. At one point in the first chapter he warns that “ending the Fed is not a magic pill to usher in Utopia.” Then, throughout the rest of that chapter and the rest of the book he describes how ending the Fed would usher in a state of affairs that sounds an awful lot like, well, Utopia.

ΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩ

Here is my reply:   http://elainemeinelsupkis.typepad.com/money_matters/2008/05/elaine-meinel-9.html

In the above link, ‘Gold As Regulator, Gold As Libra’ I explain that gold operates as a restrictor of creation of ‘money’. That is, due to being rare compared to other things and due to the difficulty in finding gold, gold being not-infinite, means that anything denoting value using gold as the gage of measurement leads to stability in pricing.

ΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩ

Let us be frank: humans love infinite wealth. Anyone who devises a system that can lead to infinite wealth via adding numbers to something, will do this. Of course, in the real world, all this does is debase whatever is being driven to infinity.

ΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩ

The obvious example of this was Zimbabwe: during the last 2 years, the Zimbabwe dictator paid for everything via printing endless zeros to paper money which was then passed out to the populace. Eventually, this led to intense, Weimar level inflation leading to the collapse of the entire banking and commerce systems of that African nation.

ΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩ

Now, for some curious reason, the news about this massive hyperinflation didn’t stir much interest in US media. Ron Paul noticed this inflation and talked about it but other than blogs like my own, https://emsnews.wordpress.com/2009/06/20/dr-fekete-talks-about-bond-markets/
there was virtually no comments about this in mainstream media.

ΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩ

I suspect this is because we are all ‘whistling past the graveyard’ of currency collapses. The shocking fact that Asia now holds over $3 trillion in cash in their FX reserves as well as another $5 trillion in US public debt should frighten our rulers as well as our laggard media bosses…many of whom are now facing bankruptcy, themselves, and desperately want to be bailed out.

ΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩ

Inflation degrades debts. The US is frantic to pay off old debts by adding zeros to pieces of paper and then handing this over to the Asian export powers and thus, discharge all of this reckless debt with worthless paper. A deflationary system will drive us into bankruptcy!

ΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩ

And the author of this piece should be fired. He states that governments don’t go bankrupt??? That is sheer insanity. History is littered with the corpses of collapsed governments driven off the cliff by debts! This is the chief cause of the death of all empires and all empires die in the long run. Government defaults are extremely destructive, just look at post-Soviet Russia!

ΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩ

The social and political chaos of bankruptcy is extremely dangerous, the bankruptcy of the Weimar Republic and how it was replaced by Nazi Germany should be a very strong warning about the dangers of bankrupting a government. France went bankrupt in the late 1700’s and this led directly to a revolution, just for example.

ΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩ

China’s plan for the US is very simple: they will give us credit so we can continue to borrow from them and they will capitalize our government debts….and they are by far, the biggest alien holders of our debts….and eventually, they will force us into bankruptcy and thus, destroy the mighty US empire and drive us out of Asia for good.

ΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩ

And by running all our systems deep in the red and deinudstrializing our own economy, we are playing straight into this scheme and in another 20 years, will greatly regret our ‘funny money machine’.

sunset borger

side picture begging boneEmail:

emeinel@fairpoint.net

MAILING ADDRESS:

EMS NEWS

P.O. BOX 483

BERLIN, NY 12022

Make checks out to ‘Elaine Supkis’

Click on the Pegasus icon on the right sidebar to donate via Paypal.


sunset borger

35 Comments

Filed under .money matters, energy, Geology, gold, religion

35 responses to “CO2 Trading Business Is 100% Fraud

  1. melponeme_k

    I’ll still be here reading your blog no matter what the future holds.

    I do believe most of the public, the man and woman on the ground, see what you see. Its obvious that we are all bouncing on rubber money stamps.

    But the people in charge are like that crazed Fishwife from the fairy tale, asking the magical fish to turn her into a goddess.

    Which brings me to that scheme I saw on TV a while back. Companies were planning to throw more plankton into the sea willy nilly and creating a whole trading scheme on that too. All the scientist fishwives on that research boat were incredibly young. No surprise the con men need the gullible.

  2. ralph

    The value of Ft.Knox Gold hoard (if it still exists) is $220 billion at spot. Does this fact alone make Gold cheap? Why doesn’t any financial tv blowhard ever mention this. Our Ft. Knox Gold hoard isnt even worth the AIG bailout? Ft.Knox Gold isnt even half a years military budget? My conclusion based on this idiocy is that Gold is unbelievably CHEAP and will soar in 2010 and beyond. Buy yours now. Physical gold that is. Not some piece of scrap paper that claims you own a gold coin or bar. Silver must be even much much much cheaper than Gold being that its above ground stockpiles are vastly smaller than the yellow metal. Cheap metals, overvalued paper.

  3. Raven

    Euro Parliament to
    Investigate Swine Flu
    Pandemic.

    Charges of Fraud

    http://www.globalresearch.ca/index.php?context=va&aid=16667

  4. emsnews

    Global Research is an antivaccinationist site.

    And Europe has a number of antivaccinationist kooks which is why the sickness and death rates of children is rising and causing global problems due to easily preventable diseases. It is quite disgusting that these crazy people use the power of the EU to hound those of us who want sane health policies.

  5. emsnews

    So, I wait impatiently for the EU to prosecute antivaccinationists for killing innocent children. Ahem.

  6. Raven

    The Global Research site
    is not the issue.

    This seems to be a credible
    individual.

    The parliament motion was introduced by Dr. Wolfgang Wodarg, former SPD Member of the German Bundestag and now Chairman of the European Parliament Health Committee. Wodarg is a medical doctor and epidemiologist, a specialist in lung disease and environmental medicine, who considers the current “pandemic” Swine Flu campaign of the WHO to be “one of the greatest medicine scandals of the Century.”

    ΩΩΩΩΩΩΩΩ
    ELAINE: And you trust this lunatic? Ok. Look, people pick and choose which government or representatives they believe based on ideological biases. This guy is obviously crazy. Thousands of young, pretty much healthy people died due to this terrible disease. They are not dying in even bigger numbers thanks to many million including MY OWN CHILDREN getting shots. What were we supposed to do? Sit idle and let it kill hundreds of thousands? Then announce, ‘We have a disease running rampant?’

    Seriously demented, this guy.

  7. DeVaul

    Yes, Ralph is right about owning gold or silver instead of paper claims to this or that, but, assuming you have the extra funds to do this, you need to make sure that you do not create a “hoard”, as this will only make you and your family a target of the government or local warlords.

    I notice that goldbugs often track the value of gold in dollars. This is illogical. Dollars are pieces of paper that are currently being debased at an astonishing rate, so who would ever want to trade their gold for dollars when the price of gold reaches, oh… say 50,000 an ounce?

    At those hyperinflationary levels, gold and silver will simply disappear from sight. Most people will resort to barter and those who do have gold and silver will use it as collateral for loans and deals. The days when gold and silver coins circulated as currency are forever gone, I fear. There just is not enough of it around anymore.

    And then there’s tungsten. Who wants to deal with that?

  8. flash

    I read somewhere that to back the current US dollar supply fully, gold would have to be at $42,000 an ounce. Since they’ll be cranking out a lot more dollars than gold in 2010, that number is going nowhere but up.

    Best of luck to Elaine and her readers in the new year. I’m not feeling too optimistic myself.

  9. emsnews

    In times of great distress, gold is used to buy mercenaries and weapons. We pray this never happens.

  10. itrucker

    carbonventures.net…not funny

  11. Raven

    I’m just suspicious of
    whether or not this
    whole thing was a a plan
    for drug companies to
    make profits.

    “In Britain, health authorities’ original worst-case scenario – which said as many as 65,000 could die from H1N1 – has twice been revised down and the prediction is now for around 1,000 deaths, way below the average annual toll of 4,000 to 8,000 deaths from seasonal winter flu.”

    ΩΩΩΩΩΩΩ

    ELAINE; I do hope you have the wit to understand that giving out quite a few million vaccinations is the cause of this epidemic not going hyper?

  12. EconCurious

    Elaine,

    I am curious as to why you are so concerned with derivatives in general. What problems do you think they will lead to? Is it an issue of the government stepping in to make good on bad bets (a la AIG, but on a much bigger scale), or is it something else?

    Since derivatives are by definition a zero sum game, it seems that the total amount of money ever made on derivatives = the total amount ever lost of derivatives = zero (at least in the aggregate). Of course if the government has to step in to make good on one side of the trade, that certainly raises some major fairness issues.

    Another question – you suggest that China “will force us into bankruptcy”. How could they possibly do this? And why would they want to? Interestingly, in the book “Noble House” by James Clavell (I think it was written in the 1960s), there is a subplot in which China plans to borrow an enormous sum from the U.S. and then default on the debt in order to destabilize our country. Kind of funny that the tables have turned so much in the last 40 to 50 years.

    Anyway, have a Happy New Year.

    ΩΩΩΩΩΩ

    ELAINE; Going bankrupt to punish someone is a form of suicide bomber. But the Chinese planned to ease the US into bankruptcy by forcing us to do as they wish as we go under and the BANKER gets to set the rules. See? Just like you can be lousy and go bankrupt, you may hurt the bank doing this but try living in a mansion afterwards. Well, Trump got to do this but his bankers wanted him to do this. If they wanted to ruin him, he would have been ruined.

    As for derivatives; the minute this market grew to be greater than the entire planet’s GDP and even bigger, this was insane and dangerous and is still going to destroy our entire banking system.

  13. zip

    happy new year!

    @econcurious,
    my understanding is that these derivatives are at this moment believed to be a new form of fiat money (which is only backed up by rating agencies..), which are devaluing all other money in the world, and hence are destroying the “good money”.

    So IMO this is the ultimate moneypress….
    As this money has to find ways of making profits, fat chance that transactions are more important than good business….hence buying companies..splitting them and strip the money out of it and put large debts into the companies….

    anyway…. best wishes for 2010

    ΩΩΩΩΩΩΩΩ

    ELAINE: Exactly. Bingo.

  14. the fool on the hill

    Derivatives aren’t a zero sum game, they are Zero itself. The problem this will lead to if they are not properly dealt with (i.e. held unenforceable on public policy grounds) is the eventual collapse of all financial systems that rely on them for capitalization.

    China can force the U.S. into bankruptcy by dumping their FOREX holdings on world markets.

    They want to bankrupt the U.S. so they can be the dominant global empire.

  15. PLovering

    US exported 8,000 tons of gold in 2007.

    US has exported 2,000 tons of gold compounds since.

    Not much gold left … if any.

    CO2 was just another false flag operation. *

    To: All “VAXnuts” …

    Happy New Year.

    http://www.sciencedaily.com/releases/2009/12/091230184221.htm

  16. tio

    I’ve been ducking bullets since I discovered this corner of the net, it took me a while not to take this personally, oh well. @econcurious .. imho derivatives are a symptom and inevitable outcome of the irresistible force of old capitalism hitting the immovable object of libra. Imagine an large fat hoary old snake, tired of the marginal reward of finding increasingly puny rodents to feed on, suddenly spotting its own tail and thinking “mmm … meaty”. Derivatives are the condiments and fine wine to be served as the inevitable feast to end all feasts starts in earnest, leading to an equally inevitable ‘pop’. Happy New Year 🙂

    ΩΩΩΩΩΩΩΩΩ

    ELAINE: I often talk about Ouroboros and even have done some cartoons about this. Very true indeed! 🙂

  17. EconCurious

    I am intrigued by the comments that others have provided on derivatives. Everyone seems to be in agreement that they will inevitably bring down the financial markets and our economy, but no-one has articulated the logic behind why this may be the case.

    My guess is that most people providing these comments have participated in the derivatives market, possibly without even knowing it. If you have a mortgage on your house, you have two derivatives (a call option to refinance your mortgage and a put option to default on your mortgage). If you have an insurance policy on you life, your house, your car or anything else, you are on one side of a derivatives transaction. If you ever bet on a sports game, or anything else, that is a derivative too. I think most of you would agree that some of these financial arrangements serve a valuable purpose in our economy (with the possible exception of sports betting).

    The only argument anyone has made as to why they are dangerous is that Elaine has pointed out that, “this market grew to be greater than the entire planet’s GDP. . .” While the size of the derivatives market may be a concern, it is important to understand how this is being measured. I suspect the $592 trillion number that is so often quoted represents the “notional” amount of over-the-counter derivatives. This is not really debt (or another form of money), but is just a metric used to determine payments when derivatives are settled.

    For example, if you have a $100,000 insurance policy, does your insurance company owe you $100,000? Well – only if you die; most of the time you are just paying them a premium to protect you from this risk. So the insurance company’s true liability is much smaller. Similarly, if everyone in the U.S. had a $100,000 life insurance policy, the total size of the life insurance market would be $30 trillion (300MM people x $100K). This is twice the size of our economy, but doesn’t necessarily mean that life insurance is “bad” or that it even poses a major risk to our economy.

    Second, derivatives are a zero sum game. If you die, your heirs are $100,000 richer and the insurance company is $100,000 poorer. If you refinance your mortgage because interest rates decline, you get a lower rate on your new mortgage (you are better off) and the bank that lent you the money for the original mortgage likely has to invest those dollars at a lower rate (they are worse off). If you bet $100 on the Yankees and your friend bets on the Cubs, and the Yankees win, you are $100 richer, and he is $100 poorer. In aggregate, NONE of these transactions result in the creation or destruction of wealth or value, they merely shift if from one party to another. And so, in aggregate, the value of all of these derivatives must be zero, even if the notional amount approaches infinity.

    Third, I suspect that the $592 trillion number reflects many offsetting derivatives positions. A bank may enter into thousands of derivatives trades in a year, but many of these positions have risks that offset each other. This tends to exaggerate the size of the notional exposure for a given firm; their net exposure if likely much smaller.

    I think the greatest concern would be if one or more financial institutions took excessive risks on one side of a derivatives position. Apparently, AIG did this when they “bet” that the U.S. housing market wasn’t so bad while many other banks were taking the opposite view. Obviously, it is not fair if we, as taxpayers are responsible for absorbing the losses of the financial institution on the wrong side of the transaction in order to fund the profits of the winners. But it does not necessarily mean all derivatives are bad.

  18. emsnews

    Some derivatives are OK. But these have NOT GROWN hardly at all over time, they grow only as the market grows.

    The greatest growth in all derivatives has been in INSURANCE ON BORROWING MONEY games! This credit default business is NOXIOUS in the extreme. And was used in lieu of ‘capital’ for covering loan losses.

    This has collapsed yet still very much exists. When AIG fell, the credit default derivatives market which happens to be about 80% of all derivatives on earth, this market collapsed totally and was saved by pumping about $3-4 trillion into this stupid derivatives market to settle bad debts.

    The US public is losing half a trillion dollars this year due to this stupid rescue operation.

  19. Katya

    As I understand it the derivatives in question are less like insurance and more like gambling in that entities that are not directly involved can place a bet.

    So you pay the insurance company for life insurance…if you die (default) your heirs get the payoff (creditors get paid off). If you don’t die (default) during the policy term the insurance company keeps the money.

    But in this new game the insurance company wants to be even safer and hedge their bet so they make a side bet with another entity that bets X amount that you will die (default). This entity didn’t issue life insurance to you (insure your debt), but they get paid if you die (default).

    A garbled explanation but still comes down to gambling.

  20. the fool on the hill

    Well, a poker game is a ‘zero sum game’ until the ‘loser’ decides he doesn’t want to pay up and pulls a gun as the ‘winner’ is reaching for the pot.

    So that’s my stab at articulating the ‘logic’.

  21. emsnews

    Heh, Katya, correct except for one little detail: these goofy gambling fools were gambling on INSURANCE backing bad loans! And they won. We got to pay for the gambling losses.

  22. Gold trading is now a profitable business. Meanwhile, key industries still keep leading roles, especially petroleum, finance and banking, steel, telecommunication and seafood. Though petroleum companies always complain about loss and difficulties, they still dominate the list, accounting for 30 percent of the top 10 vietnamese businesses.

  23. the fool on the hill

    So, you’re spamming Elaine to teach her readers how to become gnomes?

    Alrighty then!

    ΩΩΩΩΩΩΩΩΩΩ

    ELAINE: Yes, gnome school. 🙂

  24. Colin

    Something has went astray in this conversation; Derivatives are not gambling, or they should not be. And betting on sports analogies are not appropriate. Derivatives are (supposed) to be financial instruments. The point of a financial instrument is to transfer socities surplus resourses from people who are not using it, to others who will make use of it to grow the economy. It is NOT gambling; gambling is the random re-distribution of surplus in society. Randomly redistributing surplus is a bad idea. That’s was supposed to be the whole basic idea behind banks you know: they took the gold people didn’t need and lent it to others who could make better use of it in the mean-time to develop society. It amazes me that capitalism has advanced so far into culture that people now think that when banks and stock markets gamble, that’s ok, because that’s what they’re supposed to be doing. Well they aren’t supposed to be doing that: their supposed to be directing resourses toward people who can grow the economy (i.e. not to defaulters and NINJAS). So NO, deravitives are not a zero sum game. There are serious losses involved; chiefly the loss of productive deployment of resourses infavour of random (or unproductive /or entropic) deployment of resourses. The loss of efficently, the loss of productivity.The loss of ground compared with other countries; like China, who know how to deploy resourses more effectively and so grow their economy faster. In the end money, drains away from people who use it inefficently towards those who do not. Not even gambling is a zero sum game for F’s sake; individual games of poker may be zero sum, but the life of a gambler is not a zero sum game; you will not come out at the end with the same amount of money you went in with. Hint – most gamblers end up broke! And people will stop loaning you money, because they know you will just piss it away – Never in human histor have gamblers been an atractive investment!

  25. the fool on the hill

    ‘Finance’ is a con-game. That’s why the gnomes are always spouting off about ‘restoring confidence to the markets’.

  26. emsnews

    Commodity derivatives are totally different from the much, much newer and much, much more dangerous Credit Default and Interest Rate derivatives. These have no reason to exist except to ‘eliminate’ risk. Making all the paperwork involved ‘AAA’ rated deals rather than rubbish.

    This all turned out to be a fraud since no one was going to pay up on these deals.

  27. DeVaul

    I am quite surprised at the apologists above who try to justify the existence of some 200 to 400 trillion in interest rate bets. There is nothing economic about this, unless you spend your days down at the horse track.

    Any graph of who owns the most derivatives (five banks own most) and what kind (Tower of Babel for interest rate swaps) shows clearly that the entire derivatives market is nothing more than a international casino that relies on sovereign powers to enforce payment of bad bets.

    In the US, the taxpayers were forced by the government to pay the bad bets of GS, JP, AIG, and others. In China, the government has pulled a gun on the winner (as mentioned above) and kept the pot for itself. Other countris such as Iceland, Ireland, and others were wiped out completely as their population could not possibly make good the bad bets of the international derivatives gamblers.

    A bet that an interest rate on a bond will move up or down is still a “bet” and has nothing to do with economics. Allowing standing armies to enforce these bets between international banks impoverishes entire nations, many of whom were not even aware that there was derivatives market hanging over their heads.

  28. Colin

    I agree that the current derivatives market has gone mad, and i hope i did’nt give the false impression that i am saying that the deravitives market is not gambling. What im saying is that it should not be gambling, and at the start derivatives where not gambling. And comparisons to gambling obscures the problem they’ve mutated into. Derivatives where invented to help farmers, due to the risks involved in seasonal changes in the market (no one knows what the prices at next year’s harvest will be like but you’ve got to plant now) and those kind of derivatives are fine, and a perfectly legitmate finacial instrument. But, they have become a casino for gamblers. And gambling is as you quite rightly say – nothing to do with economics. Our financial system seems to have developed a flaw where we can no longer distinguish between valid financial instruments and bets, and the one mutates into the other. It’s another side of the old speculator / investor chestnut.

  29. emsnews

    I once wrote a brief history of how good derivatives were for farmers. But it was not all goodness, it was actually a way to go deep into debt, too. A constant scourge for farmers. The jobbers, on the other hand, loved buy now/pay later very much and they were the ones who did most of the wheeling dealing. In Chicago, to be exact.

  30. Good theme for discussions

  31. This is very nice post and waiting for a post like this. Thank for sharing

  32. Pingback: List Profit Ninja: Sneaky list building profit system | 7Wins.eu

  33. how moucrh in Ghana cedis and where can I get this powerffull ring

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s