Tuesday, September 1, 2009
China Threatens to Rescind Commodity Derivatives
I have repeatedly argued that credit default swap contracts be rescinded because they are continuing to drag the economy down the drain.
Nobel-winning economist Myron Scholes pretty much agrees.
This advice has been ignored by the powers-that-be in the U.S. and Western countries. But China is thinking outside of the box, at least in connection with certain types of derivatives.
According to Reuters:
A report that Chinese state-owned companies will be allowed to walk away from
loss-making commodity derivative trades provoked anger and dismay among
investment bankers on Monday as they feared it may set a damaging precedent.The State-owned Assets Supervision and Administration Commission, the
regulator and nominal shareholder for state-owned enterprises (SOEs), told six
foreign banks that SOEs reserved the right to default on contracts, Caijing
magazine quoted an unnamed industry source as saying in an article published on
Saturday.
The report hasn't yet been confirmed by the government. And this could just be a trial balloon, so we'll have to wait and see.
13 comments:
→ Thank you for contributing to the conversation by commenting. We try to read all of the comments (but don't always have the time).
→ If you write a long comment, please use paragraph breaks. Otherwise, no one will read it. Many people still won't read it, so shorter is usually better (but it's your choice).
→ The following types of comments will be deleted if we happen to see them:
-- Comments that criticize any class of people as a whole, especially when based on an attribute they don't have control over
-- Comments that explicitly call for violence
→ Because we do not read all of the comments, I am not responsible for any unlawful or distasteful comments.
Posts
Not one thing real will be lost by defaulting on this junk. Some already rich guys will loose some money and maybe some pension and mutual funds but they should have known better than putting money into these bombs to start with. Let er rip, lets get it over with.
ReplyDeleteI agree. It is time.
ReplyDeleteThank God if that's true. This might open-up people's thinking. We also need to make gambling on currencies illegal: having one's currency sold short is the greatest WMD in global finance.
ReplyDeleteThis of course is madness on the cusp of desperation. The world is an economic tinderbox, and matches abound in every corner.
ReplyDeleteOh, what the hell. It's inevitable anyway. Let the unraveling commence!
See you all on tin pan alley!
True Grey Tiger, but the Federales will pump up the event to crisis proportions, throw a half dozen $trillions to cover Goldman Sach's losses, and enact legislation which strips further our civil rights.
ReplyDeleteThere is a program called "Debt do us Part" It chronicles people living beyond there means. I wonder what percentage of North American consumer transactions are A.) Done with cash. B.) Could be done with cash without credit/debt. C.) What growth would be if people paid cash for things like they did the turn of the century. Better still by the time someone declares bankruptcy the stores they bought their goods at have already collected than money that really could never be paid back. Kind of sounds like America as a whole.
ReplyDeletego go go!!!!!!!!!
ReplyDeleteDont worry when you are starving you can get a job for a cup of rice a day...There will be plenty of jobs then...Its all been planned out years ago by fellas from Russia,China,England,Israel,and New York City...
ReplyDeleteOr else you can stand up and kick their facist asses right here in our good old USA...Thats my plan...
ReplyDeleteSounds like a good plan to me...
ReplyDeletei agree...
ReplyDeleteSounds good to me...Lets throw another peanut to that Monkey in our Whitehouse...
ReplyDeleteWHAT MONKEY ARE YOU REFERRING TO? I WANT THE BUSH/OBAMA GLOBAL TERRORIST CRIME CARTEL BROUGHT TO JUSTICE...KEEP YOUR PEANUT PEANUTHEAD...
ReplyDelete