BIS says central banks = central bagholder

[walenk]

Jim Sinclair is citing a Bloomberg story from the BIS which appears to suggest that central banks become responsible for the mountain of derivative crap, because there is no other way to clense this caca from the financial system.

http://us.mc811.mail.yahoo.com/mc/sh...q1eFQAoXSOkX1c

Somebody please 'splain to me how this is really a good thing. Looks like the ultimate socialization of loss to me. :eek::eek:

[Slimprofits]

Re: BIS says central banks = central bagholder

http://www.bloomberg.com/apps/news?p...d=a5C6ARW_tSW0

“The crisis has exposed the need for international coordination of the oversight of systemically important” clearinghouses, BIS analysts Stephen Cecchetti, Jacob Gyntelberg and Marc Hollanders wrote in a report published today. An important and unresolved question is whether clearinghouses “should have access to central bank credit facilities and, if so, when,” they wrote.


the report: http://www.bis.org/publ/qtrpdf/r_qt0909.htm

[MulaMan]

Re: BIS says central banks = central bagholder

Somebody please 'splain to me how this is really a good thing. Looks like the ultimate socialization of loss to me. :eek::eek:

It is called "free market capitalism" I just heard in on Fox News.

[vinoveri]

Re: BIS says central banks = central bagholder

old news, nothing new here, move along.

there will be no change to the system in any meaningful sense; coordinated and somewhat clandestine "write=offs" of the toxic assets by the CBs - happening already - whatever happened to all that talk about toxic assets anyway? It's like they've magically disappearred.

[rjwjr]

Re: BIS says central banks = central bagholder

old news, nothing new here, move along.

there will be no change to the system in any meaningful sense; coordinated and somewhat clandestine "write=offs" of the toxic assets by the CBs - happening already - whatever happened to all that talk about toxic assets anyway? It's like they've magically disappearred.

Maybe they weren't saying "toxic assets" after all. Maybe they were saying a "toxic ass set", you know, this one...

[*T*]

Re: BIS says central banks = central bagholder

Jim Sinclair is citing a Bloomberg story from the BIS which appears to suggest that central banks become responsible for the mountain of derivative crap, because there is no other way to clense this caca from the financial system.

http://us.mc811.mail.yahoo.com/mc/sh...q1eFQAoXSOkX1c

Somebody please 'splain to me how this is really a good thing. Looks like the ultimate socialization of loss to me. :eek::eek:

No, they are advocating the moving of OTC derivative contracts to clearinghouses with standardised contracts, so exposures can be netted out. The clearinghouses would then require backing with deep pockets. They are NOT saying central banks should carry the can on all failed contracts. Trading through a clearing house requires posting margin (limiting systemic leverage) and reduces systemic risk to counterparty failure.

This would be a VERY GOOD THING and I have advocated it before in these pages. The derivative banks, JPM chief among them, have fought it because they have a very lucrative OTC derivative business.

The BIS are dead right here, and Sinclair is quoting them as a party agreeing with him on the lunacy of unregulated OTC derivative contracts.

[walenk]

Re: BIS says central banks = central bagholder

No, they are advocating the moving of OTC derivative contracts to clearinghouses with standardised contracts, so exposures can be netted out. The clearinghouses would then require backing with deep pockets. They are NOT saying central banks should carry the can on all failed contracts. Trading through a clearing house requires posting margin (limiting systemic leverage) and reduces systemic risk to counterparty failure.

This would be a VERY GOOD THING and I have advocated it before in these pages. The derivative banks, JPM chief among them, have fought it because they have a very lucrative OTC derivative business.

The BIS are dead right here, and Sinclair is quoting them as a party agreeing with him on the lunacy of unregulated OTC derivative contracts.

Thank you for that clarification. That idea sounds much better than a sharp stick in the eye. I just hope you're right. Can we bring in a three-card monte dealer to watch these guys?