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Bill USA

Profile Information

Member since: Wed Mar 3, 2010, 04:25 PM
Number of posts: 3,466

About Me

Quotes I like: "Prediction is very difficult, especially concerning the future." "There are some things so serious that you have to laugh at them.” __ Niels Bohr Given his contribution to the establishment of quantum mechanics, I guess it's not surprising he had such a quirky of sense of humor. ......................."Deliberate misinterpretation and misrepresentation of another's position is a basic technique of (dis)information processing" __ I said that

Journal Archives

If Banks MUST keep their CDSs here's a way to remove the risk of another housing bubble

Amend Dodd-Frank law governing trading of CDSs on any home mortgage - such that - if the originator of the mortgage wants to securitize (aka: "Flip") the mortgage he MUST first sell a CDS on that mortgage to the homeowner - the individual paying on the mortgage. That way, if the mortgage goes into default - the mortgage originator has to pay off on the CDS - to the home-owner.

That way if Wall Street banks want to package mortgages in Collaterized Debt Obligations and sell CDSs on them, let them! At least the homeowner is protected from the mortgage originator writing a irrationally high risk mortgage. The mortgage originator isn't going to write a mortgage he feels he might have to pay off on (through the CDS) if it goes into default. This is a way to stop the writing of bad (irrationally high risk) mortgages - by predatory lenders (who wrote questionable mortgages just to flip them) - right from the start.

Banks Face New Checks on Derivatives Trading

In one victory for the derivatives industry, regulators agreed to apply the swap-dealer designation only to firms that arrange more than $8 billion worth of swaps contracts annually, up significantly from an initial proposal of $100 million. The plan could excuse some energy companies and large regional banks from registering.

Even so, the rule still captured the biggest banks in the world, requiring them to register as swap dealers by Dec. 31 of last year. The designation requires that banks, among other things, adopt internal risk management controls, bolster disclosures to trading partners and meet certain record-keeping requirements.

The banks must also turn over in real-time the data from their trading book. The disclosures, posted on the Web site of the Depository Trust and Clearing Corporation, a data warehouse, include the volume, time and price of each derivatives trade. The trades involve interest rate swaps and credit indexes, including the index where JPMorgan Chase suffered its recent multibillion-dollar trading loss.

The spreadsheet, regulators say, presents the public with its first window into the swaps market. While the public is blocked from viewing the identity of the trader, regulators have access to that information.

How Goldman Sachs Created the Food Crisis (this really is a MUST READ article)

from Sept 2007 to June 2008 the price of oil and food (and many other commodities) rose rapidly. Everybody was, understandably, angry about the situation. Voices were raised and many articles were written seeking a cause, a culprit. Some of the loudest voices declared America's modest effort at producing biofuels was the villain. But mainly confusion reigned and no clear understanding of the situation was ever gained. Among all the clamor, some voices were calling out Wall Street and deregulation of financial markets - including speculation in commodities - as the cause of the crisis. In the four or five months after June 2008 the prices dropped almost as fast as they had risen and our ardent anger gradually dissipated into mute disconsolance.

Now that most of the noise has died down perhaps some clarity can be gained as to what really caused the spike in commodity prices. A very good article on this subject, an excerpt from which appears below, appeared in Foreign Policy magazine at that time. ....

.. this just may be most important article you will ever read on the factors affecting the price of food and.... our economy.

"...Imaginary wheat dominates the price of real wheat, as speculators (traditionally one-fifth of the market) now outnumber bona-fide hedgers four-to-one."



It took the brilliant minds of Goldman Sachs to realize the simple truth that nothing is more valuable than our daily bread. And where there's value, there's money to be made. In 1991, Goldman bankers, led by their prescient president Gary Cohn, came up with a new kind of investment product, a derivative that tracked 24 raw materials, from precious metals and energy to coffee, cocoa, cattle, corn, hogs, soy, and wheat. They weighted the investment value of each element, blended and commingled the parts into sums, then reduced what had been a complicated collection of real things into a mathematical formula that could be expressed as a single manifestation, to be known henceforth as the Goldman Sachs Commodity Index (GSCI).

For just under a decade, the GSCI remained a relatively static investment vehicle, as bankers remained more interested in risk and collateralized debt than in anything that could be literally sowed or reaped. Then, in 1999, the Commodities Futures Trading Commission deregulated futures markets {i.e. The Commodities Futures Modernization Act => see Who Wrecked the Economy - Foreclosure Phil - Mother Jones_BU}. All of a sudden, bankers could take as large a position in grains as they liked, an opportunity that had, since the Great Depression, only been available to those who actually had something to do with the production of our food.


But Goldman's index perverted the symmetry of this system. The structure of the GSCI paid no heed to the centuries-old buy-sell/sell-buy patterns. This newfangled derivative product was "long only," which meant the product was constructed to buy commodities, and only buy. At the bottom of this "long-only" strategy lay an intent to transform an investment in commodities (previously the purview of specialists) into something that looked a great deal like an investment in a stock -- the kind of asset class wherein anyone could park their money and let it accrue for decades (along the lines of General Electric or Apple). Once the commodity market had been made to look more like the stock market, bankers could expect new influxes of ready cash. But the long-only strategy possessed a flaw, at least for those of us who eat. The GSCI did not include a mechanism to sell or "short" a commodity.

This imbalance undermined the innate structure of the commodities markets, requiring bankers to buy and keep buying -- no matter what the price. Every time the due date of a long-only commodity index futures contract neared, bankers were required to "roll" their multi-billion dollar backlog of buy orders over into the next futures contract, two or three months down the line. And since the deflationary impact of shorting a position simply wasn't part of the GSCI, professional grain traders could make a killing by anticipating the market fluctuations these "rolls" would inevitably cause. "I make a living off the dumb money," commodity trader Emil van Essen told Businessweek last year. Commodity traders employed by the banks that had created the commodity index funds in the first place rode the tides of profit.

Michael Masters, Hedge Fund owner manager, written testimony to Senate Committee on Homeland Security and Governmental Affairs - May 2008

There is a crucial distinction between Traditional Speculators and Index Speculators:
Traditional Speculators provide liquidity by both buying and selling futures. Index
Speculators buy futures and then roll their positions by buying calendar spreads. They
never sell. Therefore, they consume liquidity and provide zero benefit to the futures


The CFTC Has Invited Increased Speculation

When Congress passed the Commodity Exchange Act in 1936, they did so with the
understanding that speculators should not be allowed to dominate the commodities
futures markets. Unfortunately, the CFTC has taken deliberate steps to allow certain
speculators virtually unlimited access to the commodities futures markets.

The CFTC has granted Wall Street banks an exemption from speculative position limits
when these banks hedge over-the-counter swaps transactions.21 This has effectively
opened a loophole for unlimited speculation. When Index Speculators enter into
commodity index swaps, which 85-90% of them do, they face no speculative position

The really shocking thing about the Swaps Loophole is that Speculators of all stripes
can use it to access the futures markets. So if a hedge fund wants a $500 million
position in Wheat, which is way beyond position limits, they can enter into swap with a
Wall Street bank and then the bank buys $500 million worth of Wheat futures.23
In the CFTC’s classification scheme all Speculators accessing the futures markets
through the Swaps Loophole are categorized as “Commercial” rather than “Non-
Commercial.” The result is a gross distortion in data that effectively hides the full impact
of Index Speculation.

Additionally, the CFTC has recently proposed that Index Speculators be exempt from all
position limits, thereby throwing the door open for unlimited Index Speculator
“investment.”24 The CFTC has even gone so far as to issue press releases on their
website touting studies they commissioned showing that commodities futures make
good additions to Institutional Investors’ portfolios.25
Is this what Congress expected when it created the CFTC?


Index Speculator Demand Is Driving Prices Higher

Today, Index Speculators are pouring billions of dollars into the commodities futures
markets, speculating that commodity prices will increase. Chart One shows Assets
allocated to commodity index trading strategies have risen from $13 billion at the end of
2003 to $260 billion as of March 2008 {that is, 20 times more invested in 2008 than 5 yrs
_B USA} ,5 and the prices of the 25 commodities that compose these indices
have risen by an average of 183% in those five years!6


Commodities: Who's Behind the Boom - Barrons - Mar 2008

The speculators, now so bullish, are mainly the index funds. To see how their influence on the market has become outsized, just look at how they operate. Nearly $9 out of every $10 of index-fund money is not traded directly on the commodity exchanges, but instead goes through dealers that belong to the International Swaps and Derivatives Association (ISDA). These swaps dealers lay off their speculative risk on the organized commodity markets, while effectively serving as market makers for the index funds. By using the ISDA as a conduit, the index funds get an exemption from position limits that are normally imposed on any other speculator, including the $1 in every $10 of index-fund money that does not go through the swaps dealers.


Position limits on speculators, in some commodities specified by CFTC rules and in others by the exchanges, are generally quite liberal. For example, the position limit on wheat traded on the Chicago Board of Trade is set at 6,500 contracts. At an approximate value of $60,000 worth of wheat per contract, a speculator could command as much as $390 million of wheat and still not exceed the limit.


No such information is available from individual swaps dealers. But based on CFTC data on their total position in a commodity like wheat, together with the fact that only four dealers account for 70% of all the trading from the ISDA, it is quite clear that if the exemption were ever rescinded, the dealers' trading in these markets would no longer be viable.


The CFTC provides these figures on index trading for only 10 commodities. Why are such major commodities as crude oil, gold, and copper excluded? The agency's rationale, which even certain insiders question, is that it would be hard to get reliable information on these other commodities from the swaps dealers.

I've been over at Discussionist making a few posts and commenting on others. It's turning into a

real slugfest over there. Beginning to wonder if there is any point to participating. THese conservatives make one wonder about the human race. Really ignorant... and happy to stay that way.

CBO: Republican Surface Transportation Proposal Bankrupts Highway Trust Fund


Washington, D.C. – According to a new analysis released this afternoon by the non-partisan Congressional Budget Office (CBO), the Republican Leadership’s surface transportation bill that the House is expected to act on later this week would bankrupt the Highway Trust Fund by 2016 and create a $78 billion funding shortfall over a ten-year period.

“The Republican Leadership’s partisan signature ‘jobs’ bill is not sustainable, and would lead America’s transportation programs down a reckless path toward bankruptcy,” said U.S. Representative Nick J. Rahall (D-WV), top Democrat on the House Transportation and Infrastructure Committee. “There is no doubt we need to pass a long-term bill that creates certainty, but the only thing this bill does is make certain the Highway Trust Fund will go belly up even before the end of the bill.”

New projections released today by CBO show the balance of the Highway Account of the Highway Trust Fund will go broke by fiscal year 2016 under the Republican Leadership’s controversial plan. Over a ten-year period, the bill would create a $78 billion funding shortfall in the Highway Trust Fund, adding greater uncertainty to the future integrity of surface transportation programs.

“Despite attempts by Republican Leadership to cobble together a hodgepodge of funding that included giveaways to Big Oil, cutting pensions for middle-class American workers, and a bailout from the General Fund, the bill is going to create a huge funding shortfall that will jeopardize the ability of States and local communities to move forward with construction projects down the road,” said Rahall. “Instead of working with Democrats in a bipartisan fashion to create jobs, Republicans are advancing a partisan proposal that will destroy 550,000 American jobs while putting the future of transportation programs in doubt.”

Attached is CBO’s analysis of H.R. 7, which is also available on the House Transportation and Infrastructure Committee Democrats’ Website at: http://go.usa.gov/QET

IPCC's Climate Report: Ind Land Use Change estimates:"highly uncertain, unobservable, unverifiable"


TORONTO, Canada – The United Nations Intergovernmental Panel on Climate Change (UN IPCC) released their “Bioenergy and Climate Change Mitigation: An Assessment” report in Berlin on Sunday that confirmed that biofuels production is economically beneficial and that Indirect Land Use Change (ILUC) modelling is unverifiable.


The IPCC report contained another significant finding regarding Indirect Land Use Change, an attempt to predict future land use patterns globally. The report stated that “These estimates of global LUC (Land Use Change) are highly uncertain, unobservable, unverifiable, and dependent on assumed policy, economic contexts, and inputs used in the modelling.”

re Discussionist - it needs more rational people to show how adults address issues.

I joined, I went, I commented.

.... And yes, there are the typical Conservative Drools, but I would like to appeal to DUers to get on the site and start posting some sensible posts. If you don't want to comment on an ignoramous's post, then don't. But at least put up some sensible posts - just like what you would put up here - to show how grown-ups carry on a real discussion. By posting sensible comments and not responding directly (you can always put up a post that contradicts the idiot post you don't want to comment directly on) you are showing you don't think it is worth commenting on.

For those who are alright with it, you can comment on the idiot threads to show they are regurgitating Bullshit (provide excerpts from valid analyses by experts and show those who are open to it, how a real discussion of an issue is done) but it's not really necessary. It would be nice to see some more sensible posts/comments put up there. Put the same comments there as you would here. It may mean a few people might see something they would not ordinarily see.

Anyway, that's my plea.

Senate Republicans Hit an All Time Low Blocking Bill They Unanimously Supported


This week there were two carefully negotiated bills that appeared to satisfy both Senate Democrats and Republicans alike because there was broad bipartisan support for each. One bill, a business-backed bill to revive and extend tax breaks for companies doing research and development was filibustered (blocked) by Republicans on Thursday even though they unanimously supported it. The second bill, dealing with energy efficiency, was blocked by Republicans on Monday despite careful negotiations and compromise from both sides of the aisle. It is obvious the obstruction had nothing to do with the content of the bills and everything to do with bringing governance to a halt unless Republicans got their way.


On Monday, Republicans filibustered the Shaheen-Portman energy efficiency bill by a 55-36 vote because Democrats would not allow them to insert stealth amendment forcing the President to approve the Keystone pipeline and eliminate the wind energy tax credit. Senate Majority Leader Harry Reid offered to let Republicans have a vote on the KeystoneXL pipeline as a standalone bill, but it was not enough of a concession for Republicans so they refused Reid’s offer. Apparently there was nothing to prevent Republicans from making the Senate completely ungovernable. One can understand Republicans reneging on a bipartisan measure about energy efficiency, particularly because they could not satisfy the Koch’s coveted Canadian pipeline approval or eliminate tax credits for clean wind energy, but there is no accounting for any Republican blocking tax breaks for corporations.

On Thursday Republicans blocked a measure to revive expired tax breaks for corporations on research and development, among many other pro-business incentives; the measure failed by a vote of 53-40. Republicans liked the idea of more corporate tax breaks, but only if Democrats allowed them to insert a stealth amendment repealing the Affordable Care Act’s medical device tax, so they filibustered the legislation. Senate Minority Leader Mitch McConnell stood on the floor of the Senate on Thursday and accused Democrats of “turning the Senate into a graveyard of good ideas and open democratic debate.” What McConnell failed to tell Americans was one of the “good ideas” was attempting to force the President to approve a foreign corporation’s pipeline that serves no American’s interest except the oil export industry, the Koch brothers, and Speaker of the House John Boehner’s portfolio. McConnell continued his rant in support of obstructing legislation for obstruction’s sake by blaming Democrats for eliminating the citizens of this country’s “say in what their government does.” He also claimed the Senate is “the citadel of our democracy — the place where we guarantee that no one in this country is cut out of the legislative process. Today, we have a Democratic majority that’s turned this body right on its head.” Apparently, the Democrats and Republicans who worked out two bipartisan deals only to have Republicans block their passage unless they got amendments that served special interests is not turning the Senate right on its head.
McConnell knows that there is no legislative process in the country with obstruction-minded Republicans involved, and citizens have not had a voice in what their government does because Republicans have obstructed myriad pieces of legislation the people, and Republicans, overwhelmingly supported. The “citizens” McConnell referred to have no interest, or benefit to gain, from Republicans eliminating wind energy tax credits, forcing the President to approve the Keystone pipeline, or repealing the ACA’s medical device tax that serve the GOP’s special interests. It bears repeating the Harry Reid offered Republicans an opportunity to have their vote to supersede President Obama’s constitutional authority over approving the Keystone pipeline, but they rejected his generous offer out-of-hand.

The Senate Republicans’ obstruction has reached a point that a professor at George Washington University and leading Senate expert, Sarah Binder, said, “This is what parliamentary warfare looks like. I think the filibuster of the tax extender and energy bills — both carefully negotiated by committee leaders in a bipartisan fashion — suggests yet another deterioration of the Senate’s legislative capacity. The combination of Senate rules and competitive, polarized parties makes the Senate near ungovernable.”One does not have to be a Senate expert to know Republicans have all but ground the upper chamber’s ability to govern to a screeching halt regardless what the issue is. Senate Majority Leader Harry Reid certainly has had his fill of Republican obstruction, even obstructing bills they support and helped write. Reid said, “This useless, mind-boggling obstruction is what continually grinds the wheels of the Senate to a halt. So to my friends who want to know how we can make things better here in the Senate, I say: put an end to obstruction for obstruction’s sake.” Reid is correct that this GOP minority’s obstruction has escalated to unprecedented heights and there appears to be no end in sight.

CBO: Lower premiums drive down Obamacare’s expected costs,


The health-care law's expansion of insurance coverage will cost $104 billion less than projected over the next decade, according to revised estimates from nonpartisan budget analysts Monday. Obamacare's lower-than-expected costs will come largely because premiums will be cheaper than previously thought.

Obamacare's coverage provisions in 2014 are expected to cost $5 billion less than the $41 billion the Congressional Budget Office and Joint Committee on Taxation projected earlier in the year. The CBO now expects the federal government to spend about $164 billion less in the next decade on subsidies in Obamacare health insurance marketplaces. The CBO's expected costs of the Affordable Care Act's coverage provisions have declined since it was signed four years ago, as you can see in the below chart.

The CBO report points out that it previously thought Obamacare's exchange plans would look more like employer-based coverage, but that hasn't turned out to be the case so far — hence, the cheaper premiums. "The plans being offered through the exchanges this year appear to have, in general, lower payment rates for providers, narrower networks of providers, and tighter management of their subscribers’ use of health care than employment-based plans," CBO wrote.

Can that last, though? There's already some pushback on how narrow the 2014 health plans have been, so the networks — and, by extension — premiums will look different 10 years from now. The CBO itself said it expects exchange plans will start to look more like employer plans when exchange enrollment ticks up in future years.

Since passage of ACA $s spent on ACA attack ads was 15 times that spent on positive ones


CHICAGO — A new analysis finds the nation’s health care overhaul deserves a place in advertising history as the focus of extraordinarily high spending on negative political TV ads that have gone largely unanswered by the law’s supporters.

The report, released Friday by nonpartisan analysts Kantar Media CMAG, estimates that $445 million was spent on political TV ads mentioning the law since the enactment of the Affordable Care Act in 2010. Spending on negative ads outpaced positive ones by more than 15 to 1.


In the 2014 congressional races, 85 percent of the anti-Obama ads were also anti-”Obamacare” ads, the analysis found. In some competitive races, 100 percent of the pro-Republican TV ads aimed at Democrats contained anti-health law messages.

Over the four years, an estimated $418 million was spent on 880,000 negative TV spots focusing on the law, compared to $27 million on 58,000 positive spots, according to the analysis. Nearly all of the spending was on local TV stations, in races ranging from state offices such as treasurer and governor to Congress and the presidential election.

This CBO Report Is Another Big Win For Obamacare (> 12 million insured thru Obamacare)

I'm a bit late with this,and somebody may have posted this already, but I figure it bears repeating.


More than 12 million people will gain health insurance under the Affordable Care Act this year, according to new projections released by the Congressional Budget Office Monday. And millions more stand to benefit from the law over the next decade.

At the same time, the law's costs to the federal government are shrinking. According to the new projections, the federal government will spend more than $100 billion less on Obamacare's coverage provisions through 2024 than previously projected. That includes a downward estimate of about $5 billion this year. Overall, spending on the federal and state insurance exchanges are projected to cost 14% less than originally forecast.

The CBO said plans offered through the exchanges are narrower, allowing companies to keep premiums low and the federal government to pay less in subsidies. The lower spending projections on the Affordable Care Act will help shrink deficits overall. The CBO said the federal government will now run a deficit of $492 billion in fiscal year 2014, which is almost a 33% decrease from 2013.

Through both the federal and state insurance exchanges and the expansion of the federal Medicaid program under the law, the CBO projects more than 12 million people now have insurance who wouldn't have normally been covered in the absence of the law. The CBO also projects 19 million people will gain coverage by 2015, 25 million more by 2016, and 26 million more by 2026.

Read more: http://www.businessinsider.com/cbo-obamacare-report-how-many-people-are-insured-2014-4#ixzz320iGDLRl
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