frank miller

[Robert Mahnke]

I'm sorry -- you're busting my chops for posting a link to something needlessly esoteric? Is this still the Pynchon list?

Sent from my iPad

On Nov 29, 2011, at 6:49 PM, alice wellintown <alicewellintown at gmail.com> wrote:

> Thanks for posting the testimony on CDS, but most of it is, in the old
> parlence, esoteric and needlessly so.
> 
> It's not so hard to understand. The NPR page is actually much better
> because it presents a dialectic, the basic disagreement is that some
> see derivitives as evil bets and others as hedges or options that
> allow an investor to reduce or offset certain types of risk.
> 
> Derrivitives are simply everything in the market. Yes, our markets are
> derriviatives. That's it. We can, if  we want to confuse people talk
> the details and types, touch every inch of the elephant like blind
> men, but we get a better idea once we understand that all investments
> are derivitives, even gold. So what does this mean?
> 
> Here, wiki helps us because it has an excellent definition:
> A derivative instrument is a contract between two parties that
> specifies conditions—in particular, dates and the resulting values of
> the underlying variables—under which payments, or payoffs, are to be
> made between the parties (Wiki).
> 
> OK, so, you give a mortgage to a bank. It's a derrivitive. It's an
> agreement and the terms are specified and the conditions listed.
> 
> Easy. Now, read Fabozzi.
> 
> The handbook of mortgage-backed securities
> Frank J. Fabozzi
> 
> http://books.google.com/books/about/The_handbook_of_mortgage_backed_securiti.html?id=bmaW8_9IEzcC
> 
> Just kidding. But a good place to start. And, as I mentioned several
> times. the best book for all you guys and gals interested in this
> subject is
> Marcia Stigum’s *The Money Market*
> 
> Why are CDS or certain contracts, options, etc. so powerful that they
> act like a nuclear meltdown?
> 
> The are not so powerful or so evil or so deadly. No more than the
> mortgage you gave to the bank. Derrivitives are not the problem, no
> more than mortgages or comodities or land. Under Bush the Senior we
> had a major bank crisis. Remember that? Small relative to his sons
> bank crisis, but essentailly the same problem. It ain't cars that are
> evil, it's drunk driving.