The top incomes today

I know that. But it's not just mortgaged backed securities which bundle mortgages together for investors. It's also derivatives that are designed on the idea of futures, betting on failure for protection.

 

I see you refuse to deal with the discussion because you can't without admitting your question was nonsense used as a club to beat someone.

 

That's all true, but it's a pretty thin defense of the original statement to which I replied correctly with truth and facts.

 

I refuse to deal with people that think they are entitled to other people's money.

 

I think that pointing out that the liquid of stocks is essential to the functioning of capitalism is hardly a "thin defense."

 

Nothing wrong with buying insurance against the future failure of an asset, but the house itself is the asset that secures the loan. If you owned the lien on the house that's your protection.

The problem arose when someone other than the holder of the bond bought protection, essentially betting on failure, but that didn't cause the mass of foreclosures. Fund managers, among lots of others, were betting on failure because it was going to happen.

 

Semantics? That has nothing to do with "semantics". It's a standard "logical fallacy"

Oh... I see. You think that "stocks" are like "pokemon cards" that people just ... "sell" and "pick up" but are not based on anything in the real world, right?.

My suggestion to you is that you ignore me. Because you still have a looong way to go before you can play with the big boys (and girls) on this forum. Putting people who might teach you on "Ignore" is best for those who don't have the maturity yet to sit and learn. So it's your perfect way out of the predicament you got yourself into.

 

Then why don't you deal with me?

 

Yeahfine. But the original claim was that when we buy stock from our broker, the underlying company gets the money. IOW, we buy stock from the company represented by the stock. That is only true of IPOs and we weren't talking about them in post 24.

 

So in your world it's ok to place a loan that you know is very likely to default but deal in derivatives so that when it fails, the loss is covered? IOW it's ok to place bad loans????

 

What do I care?

 

So people give them money so they can have more money?

Do you understand the basics of economy?

 

I see that you are trying to make it personal. Let's dig into your recent activity, shall we? This is just a random selection from the last 3 days. I couldn't find a single "actual idea" that you shared out of at least 100 threads.


"U.S. "creations"? Your flip flops are priceless. According to you OP.... there were no "U.S,. creation" of any democracies."

"My suggestion to you is that you ignore me. Because you still have a looong way to go before you can play with the big boys (and girls) on this forum. Putting people who might teach you on "Ignore" is best for those who don't have the maturity yet to sit and learn. So it's your perfect way out of the predicament you got yourself into."

"You can keep repeating wingnut media fake talking points to your hearts contempt. But it's obvious to any normal thinking human being that you guys are terrified of a woman so..."

 

And , once again, you dodge the question.

 

The answer, then, is to not tax them more, but to fix the problems inherent in monetary central planning. Taxing them more will have no effect, except to assuage the envy and moral outrage of some. Meanwhile, they will find other ways to exploit the systems that the envious and perpetually outraged demand more of from their government.

 

It would destroy immense amounts of wealth. In the end, most of humanity would starve.

 

What question is that?

 

Nah. Just ban certain kinds of financial practices, tax wealth, and tax incomes over $5 million at 80%.

 

I certainly agree that taxing income without taxing wealth can have the reverse effect, like adding a 1 second penalty per 100m left in a marathon. Those at the front of the race won't be all that opposed to the idea, it prevents competition.

What we need to avoid is an undue burden on those who have "made it" the correct way - doctors, lawyers, engineers, other professionals who worked for 5 to 7 years and wagered tens of thousands to provide a valuable service to the community. They aren't filthy rich, and didn't get there by bribing government officials.

Tax should be modest on these people but harsh against those colluding with the state to establish cartels, restrict competition, etc.

 

Of course it is OK to make risky investments and it is OK to hedge that risk by selling derivatives to other risk takers.

The crime, in this case, was committed by the ratings agencies (Moodies, et. al.) who misrepresented the risk the derivative buyers were taking.

 

I see you don't distinguish between investing and loaning.

 

A loan is an investment, with risk, potential returns and losses

 

If you lend to a risky borrower, it’s good to have insurance against the loan defaulting.

Default swaps aren’t free, and they’re more expensive when the debtor is riskier.

 

A swap functions as insurance for the actual asset holder. Unfortunately for swaps, an unlimited number of individuals other than the owner can own a swap on the same underlying asset.

 

It was worse than that. The companies selling the swaps didn't have the cash on hand to cover when the defaults happened.

At the end of the day, the borrowers got what they wanted, a house they couldn't afford that would eventually be foreclosed on. The problem was too much of the financial industry got off scott free with my money.