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Derivatives for Dummies
by gamblerman (Member) - published: October 1, 2008
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Category - Essays
© Copyright by gamblerman





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How did the US get into this financial mess?

Well, since Reagan got into office. The US has been borrowing like crazy. When you cut taxes and increase spending. You need to borrow.

Where did the US get this money?

....from foreigners.

Why did they lend? Because the US economy and dollar were seen as a safe bet.

But what if you borrow money in order to place bets on a bubble?

What if you borrow in order to place bets on bets?

That's what derivatives are....

You make money by betting with a little money in a money casino.

I used to trade options and know this game well.

But betting has nothing to do with making and consuming things.

Yet it sure looks good on the balance sheet when you make a killing.

But in order to make a killing everybody else has to lose.

If everybody could win there would be no casino.

That's what happened in the last four bizarre years.

Wall St. got drunk on placing bets during an economic bubble.

Now you the tax payer must pay up to clean up this play.

Tax payer money is not enough so the US will borrow even more money from abroad.

The global derivative market is now worth 400 trillion dollars. That's 51 times the US GNP....

That's one hell of a casino.

How will this all end?

When everybody realizes that this house of cards is just that....

How will the US fare?

It will take its place among the family of nations at the rear of the table.

It's happened before with Rome, China, Spain, Holland and the UK.

If I was an Alien looking at this all from outer space I would be quite amused....






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The following comments are for "Derivatives for Dummies"
by gamblerman

what taxes are
Taxes are what you don't have in your pocket.

As a Canadian, I have spent my whole life being laughed at by Americans for paying so much taxes.

There are 12 different deductions on my paycheck, bringing my net salary down to one half of my gross salary. I'm not a high exec in a company, either, to be in this tax bracket. I'm just a worker. In the service sector.

My property taxes are two very large yearly chunks of my savings. (How do I save, you ask? I go without entertainment.) They are divided into city and borough taxes. And they don't include school or water taxes. Here in Quebec, you pay one percent of the first 50,000 dollar value of your property plus one half percent of the remaining value, in welcome tax to the municipality where you purchase your personal (not even business) property. If you move down the street in the same locality, you still pay the welcome tax.
Sales tax, made up of GST (goods and services tax)and PST (provincial sales tax), totals almost 14 percent and is applied to everything except food bought in grocery stores. Potato chips and soda and all that are taxed.
Postage stamps are taxed. Utilities such as phone and electricity are taxed.
Services such as notary fees, automobile insurance and automotive repair are taxed also. There are more taxed goods and services, too many for me to list here.
A liter of regular gasoline sells for between 1.25 and 1.50. Do the math with 3.79 liters to your gallon, eh?
The rest of Canada too laughs at Quebec for how much tax we pay.

We don't have much to show, collectively, for these taxes: we have lousy roads to drive on and one of the longest waiting lists for health care, but we have exploitable/exploited natural resources that back up real money, so I guess we're not at the "bubble" level yet...

To those who feel entitled to comfort without the need to pay taxes: it can't last...

All autocracies everywhere legislate ever-increasing taxes. They pass themselves off as democracies, too. Go figure.

It comes down to two choices, about taxes as about all else: pay up or revolt. In Canada, we don't much favour revolt.

Lucie

( Posted by: windchime [Member] On: October 1, 2008 )

Well....
Americans don't like to pay taxes period. Most European countries tax like hell and have a decent social safety net. The safety net is less in the USA and Americans just went on a borrowing binge....which cannot last either.

If you're rich in America you pay less tax and you get to borrow and gamble...what a deal....

( Posted by: gamblerman [Member] On: October 1, 2008 )

Don't mind taxes at all...BUT....
You know Michael, I am all for paying taxes to fund social programs to help the old, the young and weak and needy. And to help keep our infrastructure running well and helping the small business people stay in business, and keeping the American dream and so on going, bringing back unions and livable wages and universal health care that is not like the inhuman HMOs we find everywhere now...yes, in most countries that pay more taxes the peoples lives, health, everything is better....especially look at France and Sweden and such...they get plenty of vacation recuperation time from work via paid vacation time, childcare is supported by employers, health care fro all....America is piece of shit when it comes to its government and how it uses its taxes to fund its wars and fund the rich, and the massive conglomerates of greedy cor portions who have taken all American jobs away to slave wage country for their own profits and gains, and have left America in hell suffering and it is only getting worse...America as it is now IS NOT what our founding fathers envisioned at all, not at all, and I have plenty of quotes by those founding fathers (easily overlooked and ignored by our corrupt government, especially the Republicans)...one of these days when I am done with all that reading of those links you sent me and I have time between all this new responsibility to get things off the ground and deal with health issues and family too...well I will drop a post on that long list of very interesting quotes by our founding fathers, that will show what a twisted sick thing that's been done to their vision of America, like Jesus, I do believe that Thomas Jefferson would start vomiting if he were to stop on by here today and see what has been done to America, just like what Jesus would do to see what has been done in his name since his death...poor Jewish dude, so much layed on him when he was more like a Buddha and activist than a G-d, what a trip, can you imagine, just like poor Brian in the Monty Python "Life of Brian"...I think he would want nothing to do with what has been done in his name, especially the wearing of crosses, like Brian's followers hung old shoes from their necklaces to honor Brian...too funny. Anyway, sorry for digressing here, but it is like free association when I get on a roll.

Thanks for the insights once again, stimulating.

Blessings to you,
brother and friend
in dharma,

Namaste,
Lena

( Posted by: TheRealKarmaTseringLhamo [Admin] On: October 2, 2008 )

Yes, but....
I think the final sentence of my post says a lot....so I will talk about some high concept issues in my next post. Basically our founding fathers for all their wisdom never understood how technology could change the evolutionary landscape of humankind.

The whole industrial system that replaced the agrarian system our founding fathers were familiar with is now dying and we need to reconceptualize everything by taking a long hard look at what's going on now compared to everything that has happened in the last 3000 years....

I will do this in my next post. I will start reconnecting the dots in a radical way.

( Posted by: gamblerman [Member] On: October 2, 2008 )

FREEDOM of THOUGHT & progress...
"Basically our founding fathers for all their wisdom never understood how technology could change the evolutionary landscape of humankind."
[Quote by Michael]

Yes, indeed, so you agree, they had no idea it would become the monster it is today nor have digressed into the repulsive oppressive society and government from which they themselves left and REVOLTED AGAINST--and while on the subject, just want to add this country was NOT founded on Christian values, most founding fathers were FREEMASONS...and I have been in the original Freemason lodge founded in Fredericksburg, VA...and have once been married to a Freemason, and had my children involved, in the Job's Daughters and Rainbow girls, as well as my invitation by my then mother in-law to the Eastern Star group. I read all of my ex-husbands "secret masonic teaching and rituals" all fascinating, but the one factor that stood out for me, all lodges are different and have choices, the more Christian oriented lodges are quite different from those that have a lot of Jews as members, the rituals are changed to not offend any group...there is no requirement of believe in a particular G-d or religion, just a belief in the concept that their is a higher power, a spiritual force that runs through our lives and this world...and getting further into it, the Freemason offshooted the SHRINERS who sponsor many good causes especially children's hospitals...

I know there is much conspiracy theories about Freemasons, etc., and I don't believe that on a spiritual level any of that is true having read, and seen and experienced it first hand, it is a fraternity of men, like a union who believe in freedom of thought and men and equality, that is their basic tenants.

I'm sure many believe the opposite, but have they ever been there, seen what goes on inside the masonic lodges and temples, and I have known many a 33rd degree mason, no difference, many are older, have money, it is a support group of sorts for businessmen, but that is not their primary objective or part of what they represent or strive for...so like our founding fathers, I am sure that even in their wisdom as masons, they never envisioned the crap that has been said about them since they first hit these shores....

Looking forward to your radical new insights, may not always agree, but I love free debate and free thought and the concept of NO BIG BROTHER or Svengali controllers in government or anywhere....freedom is free. It is our right as beings, as souls, and no one has the right to try and enslave our thoughts or our souls...like many fear mongers within government and elsewhere seem to do these days.

Namaste,
Lena

( Posted by: TheRealKarmaTseringLhamo [Admin] On: October 2, 2008 )

Uh...
My own orientation is with futurists....spent quite a bit of time with them when I was a student. I was forced to think things globally and in an evolutionary way. To see how global technological and demographic trends changed human culture in radical ways....my conclusions of twenty years ago though common sensical and logical still feel radical even today...

There is a time lag between technological change which is logarithmic and human understanding of technological change which is slower....

Superimpose these curves on a graph and you have a huge gap. This gap crisis is what's blasting us...

( Posted by: gamblerman [Member] On: October 2, 2008 )

Well stated, Michael...
Yep, very good, what an insightful and experienced mind you've got. I do look forward to hearing more.

Namaste,
Lena

( Posted by: TheRealKarmaTseringLhamo [Admin] On: October 2, 2008 )

well....
I'm interested in exploring REAL issues, not bogus ones....

M

( Posted by: gamblerman [Member] On: October 2, 2008 )

Good...tired of the bullshit
Well, I'm glad for that because distraction and bullshit issues run rampant and I am tired of it too.

L

( Posted by: TheRealKarmaTseringLhamo [Admin] On: October 2, 2008 )

I can....

Ask some interesting questions based on current data and these questions may lead to some mind-bending answers....

That's all I can do.

( Posted by: gamblerman [Member] On: October 2, 2008 )

QUESTIONS & Questioning, not enough these days...
My whole thing speaking of your own radical past, mine during and since my college days was to always question authority, question everything, never just let things be feed to you like a non critical thinking sheeple. Make people think, not enough of it going around anymore ;-)

( Posted by: TheRealKarmaTseringLhamo [Admin] On: October 2, 2008 )

Uh...
It's more than that. It's about level-hopping. Jumping from one mental perspective to another while studying a problem.

Macro to micro, inner to outer....

Multiplex thinking.

I will explain this in detail in my next post.

M

( Posted by: gamblerman [Member] On: October 2, 2008 )

Okie-Dokie;-)
Love it. Looking foreward to the great beyond....multiplex thinking post. Hey, isn't that what they do in movie theaters now, eh? Where once was a big screen, one theater, now the old divided into many screens and visions...hey, that just popped into my head. Strange metaphor of sorts to me;-)

( Posted by: TheRealKarmaTseringLhamo [Admin] On: October 2, 2008 )

But,,,
It's like the multiplex screens are all in your mind....and you decide in what sequence to look at any given screen....

M

( Posted by: gamblerman [Member] On: October 2, 2008 )





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