U.S. Not Doing Enough To Police Derivatives Fraud: Karl Denninger

The Market Ticker:

We stared into that abyss in 2008 and early 2009, but rather than learn from it, revoking the business and banking licenses of the worst offenders, breaking up the monolithic businesses that threatened to blow up the world unless their demands for (even more) money were met, banning the opaque products and jailing the principals we have instead coddled them and saddled our children and grandchildren with the costs of bailing out the (proper and appropriate) detonation of these bogus transactions.

Read the whole story: The Market Ticker

Comments

[02bmw76]

05:55 AM on 02/06/2010

Mr Denninger is and has been spot on with his analysis. Can you say Kaboom? 2010 or very early 2011 is my take on the implosion.

[ScarlettMocha]

04:58 PM on 02/05/2010

Agreed,
We are not doing enough about derivative fraud. For the most part, for the bankers, it's back to business as usual. It's about time they are being called on it.

[nomadicexpat]

12:00 PM on 02/05/2010

derivatives are not inherently bad or destructive, quite the oppostite. they are vehicles for transferring risk and quite effective .. generally

[Raymond Chuang]

11:28 AM on 02/05/2010

I've always thought that the new "exotic" investment instruments like derivatives, hedge funds and credit default swaps were asking for trouble given they were never properly regulated.

This is why I want 1) these investment instruments operate with real liquidity requirements, 2) increase the minimum margin requirements for futures trading to 15% (with 25% for strategically critical items), and 3) re-impose the Glass-Steagall Act to "firewall" bank assets from the ups and downs of the stock market. Just #2 would send the price of a lot of commodities plummeting, since even Warren Buffett and George Soros wouldn't deal with futures bets if they have to put up as much as 25% for a trade in precious metals or crude oil.

[tribilin219]

10:37 PM on 02/04/2010

I always said put them in jail just put them in jail and now it's to late? Now our childrens and their childrens will be paying for this for the rest of their life's,

[BlueSkyPilot]

08:21 PM on 02/04/2010

Fraud is endemic to our society.

I'll bet that at least half of the people posting have been victims of fraud. and the other half have participated in or perpetrated a fraudulent action.

[yourmomscalling]

08:01 PM on 02/04/2010

THE SEC IS A GD JOKE THIS WHOLE ADMINISTRATION IS A JOKE !!!

[ScarlettMocha]

04:58 PM on 02/05/2010

Your comment is a joke.

[vippy]

06:12 PM on 02/04/2010

Derivatives need to be addressed quickly. There are trillions out there and they all can default. Why is it allowed that speculators can trade now only with paper, never ever having to take delivery of product and thereby driving up its price. This is asinine. We are dealing with fiction here only the money is REAL to those who play. Should they default then they scream for the tax payers to bail them out.
Why is it voters cannot see this, why vote for any of those parties, who are either in with it, well, we do have something 269 millionaires in congress, or they are paid to shut both eyes. This has to stop.
Imagine they do with other commodities like they are doing with oil, raise the price on the hope that demand will go up. What happened to capitalism as we knew it?