Comments on: On Bailouts http://bearingdrift.com/2008/09/22/on-bailouts/ Fri, 25 May 2012 13:09:47 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Jeremy Hinton http://bearingdrift.com/2008/09/22/on-bailouts/#comment-7283 Jeremy Hinton Tue, 23 Sep 2008 04:29:12 +0000 http://bearingdrift.com/?p=1879#comment-7283 I'd heard Warren Buffet's quote referring to derivatives as <b>financial weapons of mass destruction</b> bandied about lately. It's interesting though to read this <a href="http://news.bbc.co.uk/2/hi/business/2817995.stm" rel="nofollow">2003 article on the annual shareholder letter that year</a> from the Sage of Omaha. I’d heard Warren Buffet’s quote referring to derivatives as financial weapons of mass destruction bandied about lately. It’s interesting though to read this 2003 article on the annual shareholder letter that year from the Sage of Omaha.

]]> By: Jeremy Hinton http://bearingdrift.com/2008/09/22/on-bailouts/#comment-7265 Jeremy Hinton Mon, 22 Sep 2008 20:39:52 +0000 http://bearingdrift.com/?p=1879#comment-7265 Jason, I agree on a good portion of this post. However, the whole "strong fundamentals" thing, while good for cheerleading and needed to counter the save-yourself mentality, is questionable. Much of the current meltdown has been attributed to CDS derivatives as you mention above. Estimates are that the CDS market at the end of 2007 was upwards of $45 <b>trillion</b> dollars. As i saw on one economists site - <blockquote>Since 2000, it has ballooned from $900 billion to more than $45.5 trillion — bigger than the US equity markets, US Treasuries, and Mortgage Securities -- COMBINED.</blockquote> I've also seen it referred to as larger than the entire worlds GDP. With such a HUGE and pervasive piece of the global economy now crumbling away, how is that sound fundamentals? Jason,

I agree on a good portion of this post. However, the whole “strong fundamentals” thing, while good for cheerleading and needed to counter the save-yourself mentality, is questionable. Much of the current meltdown has been attributed to CDS derivatives as you mention above. Estimates are that the CDS market at the end of 2007 was upwards of $45 trillion dollars. As i saw on one economists site -

Since 2000, it has ballooned from $900 billion to more than $45.5 trillion — bigger than the US equity markets, US Treasuries, and Mortgage Securities — COMBINED.

I’ve also seen it referred to as larger than the entire worlds GDP.

With such a HUGE and pervasive piece of the global economy now crumbling away, how is that sound fundamentals?

]]> By: J’s Notes » Bailouts, Paper Money And Inflation http://bearingdrift.com/2008/09/22/on-bailouts/#comment-7261 J’s Notes » Bailouts, Paper Money And Inflation Mon, 22 Sep 2008 19:22:18 +0000 http://bearingdrift.com/?p=1879#comment-7261 [...] today I wrote about the bailout at Bearing Drift but forgot to mention one point that the news has reminded me of: in order for the government to [...] [...] today I wrote about the bailout at Bearing Drift but forgot to mention one point that the news has reminded me of: in order for the government to [...]

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