How Modern Finance Created Its Own Downfall

**How Modern Finance Created Its Own Downfall **
October 15, 2008
oftwominds.com/blog.html

Part I: A 70 Trillion Dollar Counterfeiting Ring
Zeus Yiamouyiannis, September 23, 2008
oftwominds.com/journal08/zeus9-08.html

Part II: How the Credit Default Swap Scam Works
Zeus Yiamouyiannis, Ph.D., October 13, 2008
oftwominds.com/journal08/zeus10a-08.html

Part III: Credit Default Swaps Create Less-Than-Zero Value
Zeus Y. Ph.D., October 13, 2008
oftwominds.com/journal08/zeus10b-08.html

There Is Ultimately No Gaming the System: When the Micro Crash Reflects the Macro Crash
Zeus Y., September 29, 2008)
oftwominds.com/journal08/zeus9a-08.html

Article sent to me by the brother-in-law in the US who is of a Ron Paul persuasion:

10/4 Jennifer Barry - The Dollar is Doomed

Dear Greenbear this is a great well informed article and we would all do well to heed its warnings. We came into this planet on our own and we will go out on our own. We should not expect governments to protect or reward us or deliver us. Off we should go and become a lot more self sufficient. People who have never gone through recessions don’t understand what is happening. To be fore warned is to be forearmed. Best of luck to everyone.

GB and dowtchaboy thank you for two informative articles. I would however caution anyone without a financial background to take two paracetemol before reading as the headache will be severe by the time you finish digesting both. The one thing I gained from the article by Zeus Yiamouyiannis was the likeness to a pyramid scheme of the CDS market. I saw a presentation about eight months ago detailing the creation of money in the modern banking system which was the beginning of my understanding of the house of cards we are living in. The only thing was that there was at least some small amount of real money (wealth) underpinning the loan structure whinch was used to create all the banks money. There seems to be less money at the bottom of the CDS pile than initally entered the system if my understanding is correct and therefore would it not make sense to scrap that market completely and simply lock in the losses right now without increasing them by letting this market unwind slowly.

Thank you for putting me in such august company as GB - however I simply forwarded the article to the 'Pin - I don’t claim to understand it! I still don’t understand what exactly “money” IS! Today I was trying to reason with someone who has flipped from being a mocker of doom and gloom merchants (like myself) to being suicidal - she is worried that the dollar and the euro and sterling and EVERY currency will devalue (huh?) and that gold will fall in “value” too… how do you explain that this is not possible? I can’t even work it out myself! Every time someone puts up an article here (apart from the nut-job conspiracy ones) I find my self nodding in agreement with it even if it is in direct contradiction with the previous one I applauded.

Who says it’s impossible? :nin
Unlikely? perhaps…
but impossible? Nope…

and a hell of a lot more likely today than last year…

we’ll do what we humans usually do… have a bloody revolution hang the chief suspects and start the same mistakes over

Who says it’s impossible? :nin
Unlikely? perhaps…
but impossible? Nope…

and a hell of a lot more likely today than last year…

we’ll do what we humans usually do… have a bloody revolution hang the chief suspects and start the same mistakes over
But surely if EVERY currency devalues by say 50% the end result is NO devaluation? Against what have you devalued? Gold? But she also thinks gold will devalue… against what? My brain hurts when I try to understand this stuff. Now revolution - that’s a fine and noble idea :smiley:
Like most people (?) I have my Secret List of those who should be first up against the wall. Wasn’t there a thread on the this or am I thinking of politics.ie?

**But surely if EVERY currency devalues by say 50% the end result is NO devaluation? Against what have you devalued? Gold? But she also thinks gold will devalue… against what? My brain hurts when I try to understand this stuff. Now revolution - that’s a fine and noble idea :smiley: **
Like most people (?) I have my Secret List of those who should be first up against the wall. Wasn’t there a thread on the this or am I thinking of politics.ie?

I’ll give you a hint.

Paper and metal are not part of a well balanced diet.

Apocalyptic yes… impossible … no…

Yep. We’re growing our own veg so we’ll have something to trade for tea and sugar.

Since all Modern currencies are what’s known as faith-based or fiat currencies they could all be decreasing in value at the same time against hard assets or life essentials however compared to each other they would look stable.

en.wikipedia.org/wiki/Fiat_currency

Some people say that Gold been a good preserver of wealth over time (thousands of years).

With all the manipulation, debt destruction and bailout money printing going on at present it’s very difficult to know how this is ultimately going to play out.

Thanks for the above replies folks. Y’know this possible retreat into barter and/or lower tech may suit me - I used to grow amazing amounts of veg and fruit in 1/10th of an acre - my kids grew up eating and appreciating the taste of fresh veg - carrots straight from the ground, tomatoes hot from the greenhouse, peas straight from the pod, never reaching the kitchen. And the fruit - dribble down yer face pick em when they are just ready pears - yum (“Beth” is a brilliant variety). Used to have to have to throw away plums 'cos the weight of them was breaking branches.
Now if land drops to a reasonable price (and so far it has not) I will be looking to buy some and do a bit of market gardening. I tried to interest Cork Co Council in the idea of allotments a few years ago but got total incomprehension.
Interesting times…

dowtchaboy, you quoted from “10/4 Jennifer Barry - The Dollar is Doomed”

A number of points.

  1. Jennifer Barry, Global Asset Strategist is probably talking her own book (long on precious metals, short on the dollar). The opposite of this what is happening at the moment.

ft.com/cms/s/0/0d257b12-a0e8 … ck_check=1

  1. With regard to Fannie and Fredddie, the following post says that they were not not primary source of the sub-prime problem

econbrowser.com/archives/200 … e_and.html

I think country default (dollar default) is possible but is not how it will immediately play out. If you like this stuff check out www.nakedcapitalism.com Best day by day analysis of the credit crunch on the web IMO.

Agree with you there.

Another fine first post!

Thank you Podd - I appreciate the thoughtful response - while I posted up that article, I don’t claim to agree with or to fully understand it - I am still groping my way through an area that is far removed from my own (Engineering/Mathematics). The 'Pin has been educational, despite or even because of the occasional opinionated rant, - what I need is Economics 101 presented by someone with no axe to grind!
Welcome to the 'Pin, by the way. db.