Seer Says:
November 12th, 2008 at 8:56 pm

Credit Default Swap Scam 101

Players:
(A)CDS-issuing “Insurance” Company
(B)Buyers of “Insurance”
(C)Some Event
(D)Taxpayers
(E)”Insurance” Company CEOs

(B)Buyers pay $10 billion in premiums and gets $100 billion from (A)CDS-issuing “Insurance” Company if (C)Some Event Happens. Amazingly, (C)Some Event happens. (A)CDS-issuing “Insurance” Company goes bust because it can’t pay out all its CDS “Insurance” obligations. (B)Buyers of now lucrative “Insurance” contract wants to get paid. Cries to DC. DC makes the (D)Taxpayers take over the obligations of these lucrative contracts. THERE IS NO ASSET. THERE IS ONLY PAYING THE INSURANCE CONTRACT. (D)Taxpayers gets NOTHING and pays out the nose to (B)Buyers of now lucrative “Insurance” contract. The original $10 billion premiums are gone as they have already paid for the (E)”Insurance” Company CEO’s salaries and lavish lifestyles.

That is the SCAM.

Wall Street and DC are FORCING (D)Taxpayers to pay for BETS(No underlying assets) that they don’t want to pay up on. Yes, you, (D)Taxpayers, minding your own business, are being FORCED(try not paying your taxes and you’ll see what force comes along) to pay for the SCAM of rich Wall Street and DC.

Why use quote around “Insurance?” Because the finance services industry got around having these considered insurance products so they didn’t need to be regulated and have proper reserves in case of problems.

(E)”Insurance” Company CEO’s money: safe in Swiss banks.
(B)Buyers of “Insurance” money and payouts: safely increasing in Swiss banks.
(D)Taxpayers’ money: pouring out every window to the rich.