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Counterfeit Value Derivatives: Follow the Bouncing Ball

by Zeus Yiamouyiannis, copyright 2012

Here is how the counterfeit value derivative con works. It’s a game of “I pretend, you pretend, we all pretend, and the taxpayer will pay in the end”. 1) I’ll create an instrument, say a credit default swap (CDS), an unregulated insurance with no capital requirements, with a certain “notional” value. Notional value is just something I assign. It does not have to be attached to or backed by any real asset or actual money/principal, but I can pretend as if it is. (Notional amount.)2) As a seller, I will just declare that this swap covers the full value X of this company, contract, etc. if credit event Y happens. I receive lucrative insurance premiums and fees for my unbacked promise. The CDS’s value is based in nothing more than my promise to pay. I don’t have

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Added: Feb-3-2012 Occurred On: Feb-3-2012
By: marc1921
In:
World News
Tags: Economy, Fail, Derivatives, , CDS
Location: United States (load item map)
Views: 2839 | Comments: 15 | Votes: 2 | Favorites: 0 | Shared: 0 | Updates: 0 | Times used in channels: 2
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