Is this different than while riding an elevator, someone (person A) overhearing an "insider" talking on a cell phone about information that Person A can benefit from if He/She acted on the information, i.e. bought stocks.

This is called Insider Trading. This can be very hard to detect, so the Feds throw a very large net to entrap anyone "near."

... another sledgehammer science result.

Given the established cyber-casino,
run by the criminals taking over
the regulation of the casino,
being able to make money
to gamble with, out of
NOTHING, but faith
in social habits ...

and,

given derivative bets made with fiat money,
FOR SURE, there are going to be "risks"
that nobody can penetrate enough now.

That article seems like a bunch of jargon,
backed with its sledgehammer modelling,

to demonstrate that derivatives enabled
cyber-casino gambling that nobody can
understand nor predict all the outcomes.

The derivatives were derived from frauds.

Derivatives were frauds built on frauds!!!

Of course, they enable asymmetry between
the people running the cyber-casinos, and
those people who are forced to live inside.

"Combining computer science and finance"
is always going to be more manifestations
of the principle of garbage in, garbage out.

Can someone please explain to me HOW leveraged assets can be further leveraged, as is the case with CDO's, and, WHY someone would buy such an asset?? Oh I get it, greed... and more greed. I think I read somewhere that greed begets greed but I am probably making that up.

Ok, seriously, someone help!

The good thing: this ought to give both investors and law makers something to consider.

The bad thing: heavy-duty mathematicians and computer scientists coming into financing. This will definitely widen the gap between those who can afford to buy better information and better tools, and those who don't.

Sadly, those who don't, are the regular people. And it's their money (their loans, investments) everybody else is playing with.

The bad thing: heavy-duty mathematicians and computer scientists coming into financing. This will definitely widen the gap between those who can afford to buy better information and better tools, and those who don't.


They've been there for over 20 years. On Wall Street, they're called "quants".

I started down that road about 1991, and bailed out after a couple of years for other areas of computer science. The folks running the show on the business side were naive and only wanted to hear what they wanted to hear, not the honest truth about what mathematical models could and couldn't do. It was clear to me a disaster or three were looming, and from both an ethical and practical perspective, I didn't want to be involved.

"the finding came from combining computer science and finance, which has not been done before"

Yeah right... no one has used computer science to study finance before.... what kind of ignorant comment is that?

Seems like our confusion in money has its root in just a few fallacies:

1) Humans creating money at will can be trusted to never use this ability to their advantage;

2) Allowing some groups of people to create money at will and trade it secretly for profit will INCREASE the equality and liberty of the rest of the world;

3) There's nothing anyone can do about it.

I should also say that the best way out of the current mess is to adopt some of the methods learnt during my college days. I loved the simplicity that went beyond socialism, the brilliant but unattainable purity. Asthe maste himself said "Capital is money, capital is commodities. By virtue of it being value, it has acquired the occult ability to add value to itself. It brings forth living offspring, or, at the least, lays golden eggs."

For as long as there are sufficient people to affirm and insist that Free Market Capitalism is the Natural Order of the Economy, and is the product of Darwinian evolutionary forces, and therefore a perfectly adapted organism, and beyond being interfered with, then there will ALWAYS be problems like this in both local and global economies. The fact is that they are not perfect, naturally arising environments. They are the constructs of human activity, and susceptible to manipulation.
The question that SHOULD be asked, is: "Where did those HUNDREDS of TRILLIONS of dollars go?"
I sure as hell don't have them. Do any of you guys? I didn't think so. Another question is: "What are you going to do with that money, now that you have it? You couldn't possibly spend it all, especially since you're not gonna buy everyone new shoes!"
And the very best part of all this is that WE- as in TAXPAYERS- are left with this ticking time bomb sitting in our laps. Crisis is not over, people.

I won't presume to speak for the rest of you- especially since some of you would most certainly disagree- but I have some profound difficulties with the notion of a system wherein those at the top are allowed to just reach in and grab whatever they want whenever they want, with the full force of Government and weight of Law(not to mention about half of "Public Opinion") to assist them- especially if there is any resistance. This is nothing less than thievery, perpetrated by a relative few, and abetted by the very government that most of us elected thinking that it was supposed to prevent the very thing. It is hard for me to accept that people sit around and (sometimes pretend to) scratch their heads and say that they just don't understand how or why this could happen. There is no mystery whatsoever.
@Arkaleus- very succinct. I felt the need to embelish.

No, the debt is still sitting there- for us to pay off.
Here's an example for you. If I bundled 500 million dollars worth of sub-prime mortgages into a "complex derivative" security, do you think I sold it to a "consumer" with out getting any cash in exchange for it?
These, and many other types of similar transactions are what vacuumed all of that available cash out of our- and therefore the rest of the world's- economy. Again I say, the question that you should be asking is: Where did all that money go?"



@otto-
Agreed. If you're not in a position-pretty much from the outset- to be able to take advantage of the protections(all for the benefit of those at the top of the pyramid)that are built into the system, then you are basically just a crop to be harvested.
When you hear the phrase "growing wealth" you can interpret it in the literal sense, because unfortunately, you run the very real risk of "growing" it for someone else.

For any adult to consider themselves matriculated in reality they should be able to fearlessly model the power structure of the world. They choose early in life which of those powers to join.

Those who have elected the power of liberty and uprightness know that paper money is the weapon of bloodless global conquest, and it is used against us at home as well as others abroad. They all know the moneyprinters have used this weapon of mass delusion and ensnared us in a diabolically engineered scheme.

When considering the United States, the sightful eye sees the warning of Andrew Jackson emerge from the abominable dreams of our forefathers into living flesh as the Federal Reserve, IMF, and World Bank.

When these power groups succeed in consolidating the available capital of the world, their rule will be absolute - unless something happens that is against the "rules".

Fallacy #3 need not be bloody, Velanarris. Banksters are weak, and no one will die for them.

We should hang the people that made derivatives a reality for high treason. They are murderers just like saddam and osama are. Putting financial squeeze on people, sometimes extreme enough to starve people to death. These people are bigger murderers than even stalin was.

You have to say that capitalism, the creation of wealth from 'thin air' has plunged us into a sea of debt. never before has so much, of nothing, been owed to so few by so many.
As Karl Marx said "Democracy is a form of government that cannot long survive, for as soon as the people learn that they have a voice in the fiscal policies of the government, they will move to vote for themselves all the money in the treasury, and bankrupt the nation."

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As Karl Marx said "Democracy is a form of government that cannot long survive, for as soon as the people learn that they have a voice in the fiscal policies of the government, they will move to vote for themselves all the money in the treasury, and bankrupt the nation."

Marx was quoting someone else, if not an earlier Greek writer then Alexander Tyler in 1787:
THE FALL OF THE ATHENIAN REPUBLIC... "A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse over loose fiscal policy, (which is) always followed by a dictatorship."

To complete the line of thought, Marx could not understand two things:
1) that the ruling class wants to remain the ruling class and will twist the system to keep their children in the ruling class.
2) if everybody is paid the exact same thing regardless of the work performed there is no reason to excel, because there is no rewards.

All of the so called Communist countries in the 20th century were in fact dictatorships with superficial Marxist guise. That's one of the reasons the USSR was referred to as Marxist-Leninism instead of Marxist.

The American economy represents 1/3 of the World's GDP. Wall Street peed on a LOT of boots besides the American taxpayer.

I'd suggest a review of deregulating the ability to combine banking services, as has been done this past two decades.

That has failed.