Derivative markets are a great arena of financial masturbation relying on algorithms and sociopathic greed to have created upwards of $1.2 Quadrillion Derivatives to bet on.
Synthetic portfolios of unmitigated and deregulated risk allow mathematicians to contrive a virtual world of vectors to play with. Players stand on the sidelines throwing real money into a black hole to bet on the success or failure of Swaps going in one direction or another; or going in opposite directions from each other, either simultaneously or not.
Market makers have created Financial Russian Roulette Tables they call markets; while regulators stand silently by watching their friends and former colleagues make mega millions from trading fantasy “investments” that are too complex to explain. It is difficult to explain something that is not real, like a Zombie or like a god. And this entire game is based on faith, faith in what PT Barnum observed so many years ago – “a sucker is born every minute.”
P.T. Barnumwww.ringling.com/ContentPage.aspx?id=45831§ion=45825Cached – There is no proof that Phineas Taylor Barnum ever said, “there’s a sucker born every minute.” He did, however, say that “every crowd has a silver lining,” and …
And there is no proof that Derivative Swaps have a shard of real existence except in the minds of the mathematicians that created them, and in the faith of the players. There is no proof that Zombies or god exist either, yet that doesn’t stop movie makers or religion makers or hoards of fearful participants.
Some of the great religion makers at least were trying to control man’s baser instincts by attempting to introduce a way to value individual life at a time when people were commanded to go to war at the burp of a king, and build pyramids or wall off a continent-sized country.
Religion is based on faith, and so are derivative markets – just a different kind. Derivative markets are based on the faith (or is it the assumption) that players will come to bet based on the hope (or it is assumption) that betting on derivatives will be profitable if they are better than a majority of the other players. Just like your odds are better if the people you play poker with are not as good as you are. However, there is one distinction – the market makers are the house, like a casino is the house if you choose to play poker in the controlled environment of a casino.
Unlike a casino with recognized odds and regulated by gaming commissions – market control is a charade. Because market makers and sophisticated investor-gamblers assume risk can be mathematically measured and mitigated by hedging with swaps – which only creates more risk. Market makers only sincere concern is to maintain the velocity of the trades and the unfettered ability to keep the markets (the tables) open at all times. Being open offers the brilliantly “sophisticated” investor–gamblers a comfort level derived from the illusion-promise of being able to sell at any time. Being able to sell or get out is called liquidity and is misperceived as control by investors because investors can decide to exit. Liquidity is a back door to saving your ass.
But liquidity depends entirely on buyers to want to buy the hot potatoes at a time when too many want to get out. (Refer to Lehman Brothers for a spectacular example of what can happen in a much smaller market than $1.2 Quadrillion of derivative/swap risk.)
The people behind the great arena of financial masturbation are god like, and above the law just like mafia godfathers; and like the kings of yore have amassed personal riches beyond the dreams of ordinary kings. But they are similar in the sense they do this at great risk to their kingdom; which today means – the economy of the country they live in as well as the entire globe.
Derivatives are the most sophisticated game, so have attracted a following of brilliant mathematicians and finance majors only concerned for good paying jobs. And our colleges and universities have obliged this human need to find a good job by providing courses on Derivatives motivated by matriculation fees. But have finance professors and their employers considered that Derivatives, under the surface of all things real, are nothing but a ticking financial H-Bomb sized black hole of risk?
The Monte Carlo Method for pricing financial derivatives www41.homepage.villanova.edu/…/financial…/presentatioMonteCarl…Similar -File Format: Microsoft Powerpoint – Quick View
Applying the Monte Carlo method to financial derivatives, continued … Most Monte Carlo Methods are implemented via a computer program rather than solved …
Doctorate Degree Programs – Complete List – Global Derivatives www.globalderivatives.com/schools/doctoratefinanceprograms.phpCachedDoctorate Degree Programs With a Focus on Quantitative Finance / Derivatives. Profiles: The profiles are all of our own work and are compiled with information …
Curriculum | UCLA Anderson School of Management www.anderson.ucla.edu › … ›Degrees › Master of Financial EngineeringCached – Similar Limited to Master of Financial Engineering Program students. … paradigms used in derivatives finance including an introduction to stochastic processes, …
Capital Markets, Derivatives and Treasury Training – Dcgtraining.com www.dcgtraining.com/pdf/Capital-Markets.pdfSimilarFile Format: PDF/Adobe Acrobat – Quick View
Derivatives trader, Global bank … of tailored training services to the banking, financial … Financial Core Competency and Specialist Skills Programme …
Robert McDonald – Faculty – Kellogg School of Management www.kellogg.northwestern.edu/Faculty/…/McDonald_Robert.aspxCached He has taught courses in derivatives, corporate finance, and taxation. Professor McDonald’s research interests include corporate finance, taxation, derivatives, …
Has anyone focused on the Fed Bank Holding Company regulation that makes investments which cannot be explained well enough to be understood unlawful?
IM-2210-1. Communications with the Public About Collateralized Mortgage Obligations (CMOs) – (a) General Considerations,… (3) Safety Claims – A communication should not overstate the relative safety … (5) Simplicity Claims – CMOs are complex securities and require full, fair and clear disclosure in order to be understood by the investor. (refer to Chapter 8 in: How We Got Swindled by Wall Street Godfathers, Greed & Financial Darwinism ~ The 30-Year War Against the American Dream.
It is self-evident that Market makers are concerned with fees no matter what the consequences; as it is apparent that matriculation fees are also more important than consequences.
So what do we do?
Sociopathic greed is a chronic condition/disease found among some members of the human race. It has been possible to eradicate some terrible diseases through scientific discoveries leading to totally efficacious vaccines, like Polio and Small Pox. Public health has also contributed to a healthier society by eliminating open sewers; and the great invention by Uranus Crapper made the toilet more accessible to those who could only afford to rent a toilet for a moment of need.
In the aftermath of the Great Depression, brought about by unfettered, rapacious sociopathic greed, it was discovered in 1933 that the best way to control the chronic disease of sociopathic greed was to quarantine it – just like tuberculosis was confined to sanatoriums in 1933 (maybe that’s what should be done with Santorum). So Congress in a quarantine spirit, and gasping for daylight with millions in bread lines, passed Glass-Steagall in recognition of the fact of the lethal impact of unrepentant narcissistic, even self destructive, greed. The sociopath’s appetite for green may be akin to horses eating themselves to death by gorging on too much green. But by 1956 it was recognized there was more to be done so the quarantine was improved with the advent of the 1956 Bank Holding Company Act.
Quarantining unbridled greed worked for decades until the sociopaths got their way and got Congress to deregulate greed and remove their quarantine. Deregulation of Wall Street Banks released the ravages of their ugly disease once again. So now we have a plethora of gamblers playing Financial Russian Roulette – and so far this has not been properly recognized or addressed – even in the aftermath of the 2nd worst economy since 1776.