Wildman’s Hangout

Derivative Markets: An Easily Understandable Explanation of Derivative Markets

Susie is the proprietor of a bar in Detroit She realizes that virtually all of her customers are unemployed alcoholics and, as such, can no longer afford to patronize her bar. To solve this problem, she comes up with a new marketing plan that allows her customers to drink now, but pay later. She keeps track of the drinks consumed in a ledger (thereby granting the customers loans).

Word gets around about Susie’s “drink now, pay later” marketing strategy and, as a result, increasing numbers of customers flood into Susie’s bar. Soon she has the largest sales volume for any bar in Detroit .

By providing her customers freedom from immediate payment demands, Susie gets no resistance when, at regular intervals, she substantially increases her prices for wine and beer, the most consumed beverages. Consequently, Susie’s gross sales volume increases massively.

A young and dynamic Vice President at the local bank recognizes that these customer debts constitute valuable future assets, and increases Susie’s borrowing limit. He sees no reason for any undue concern, since he has the debts of the unemployed alcoholics as collateral.

At the bank’s corporate headquarters, expert traders transform these customer loans into DRINKBONDS, ALKIBONDS and PUKEBONDS. These securities are then bundled and traded on international security markets. Naive investors don’t really understand that the securities being sold to them as AAA secured bonds are really the debts of unemployed alcoholics.

Nevertheless, the bond prices continuously climb, and the securities soon become the hottest-selling items for some of the nation’s leading brokerage houses.

One day, even though the bond prices are still climbing, a risk manager at the original local bank decides that the time has come to demand payment on the debts incurred by the drinkers at Susie’s bar. He so informs Susie.

Susie then demands payment from her alcoholic patrons, but being unemployed alcoholics they cannot pay back their drinking debts. Since Susie cannot fulfill her loan obligations, she is forced into bankruptcy. The bar closes and the eleven employees lose their jobs.

Overnight, DRINKBONDS, ALKIBONDS and PUKEBONDS drop in price by 90%. The collapsed bond asset value destroys the banks liquidity and prevents it from issuing new loans, thus freezing credit and economic activity in the community.

The suppliers of Susie’s bar had granted her generous payment extensions and had invested their firms’ pension funds in the various BOND securities. They find they are now faced with not only having to write off her bad debt but also with losing over 90% of the presumed value of the bonds. Her wine supplier claims bankruptcy, closing the doors on a family business that had endured for three generations, and her beer supplier is taken over by a competitor, who immediately closes the local plant and lays off 150 workers.

Fortunately though, the bank, the brokerage houses and their respective executives are saved and bailed out by a multi-billion dollar, no-strings attached cash infusion from their cronies in Government.

The funds required for this bailout are obtained by new taxes levied on employed, middle-class, non-drinkers who have never been in Susie’s bar.

Do you think this can ever happen?

I’m Arizona State Senator Sylvia Allen. I want to explain SB 1070 which I voted for and was just signed by Governor Jan Brewer.
Rancher Rob Krantz was murdered by the drug cartel on his ranch a month ago. I participated in a senate hearing two weeks ago on the border violence, here is just some of the highlights from those who testified.

The people who live within 60 to 80 miles of the Arizona/Mexico Border have for years been terrorized and have pleaded for help to stop the daily invasion of humans who cross their property . One Rancher testified that 300 to 1200 people a DAY come across his ranch vandalizing his property, stealing his vehicles and property, cutting down his fences, and leaving trash. In the last two years he has found 17 dead bodies and two Koran bibles.

Another rancher testified that daily drugs are brought across his ranch in a military operation. A point man with a machine gun goes in front, 1/2 mile behind are the guards fully armed, 1/2 mile behind them are the drugs, behind the drugs 1/2 mile are more guards. These people are violent and they will kill anyone who gets in the way. This was not the only rancher we heard that day that talked about the drug trains.

One man told of two illegal’s who came upon his property one shot in the back and the other in the arm by the drug runners who had forced them to carry the drugs and then shot them. Daily they listen to gun fire during the night it is not safe to leave his family alone on the ranch and they can’t leave the ranch for fear of nothing being left when they come back.

The border patrol is not on the border. They have set up 60 miles away with check points that do nothing to stop the invasion. They are not allowed to use force in stopping anyone who is entering. They run around chasing them, if they get their hands on them then they can take them back across the border.

Federal prisons have over 35% illegal’s and 20% of Arizona prisons are filled with illegal’s. In the last few years 80% of our law enforcement that have been killed or wounded have been by an illegal.

The majority of people coming now are people we need to be worried about. The ranchers told us that they have seen a change in the people coming they are not just those who are looking for work and a better life.

The Federal Government has refused for years to do anything to help the border states . We have been over run and once they are here we have the burden of funding state services that they use. Education cost have been over a billion dollars. The healthcare cost billions of dollars. Our State is broke, $3.5 billion deficit and we have many serious decisions to make. One is that we do not have the money to care for any who are not here legally. It has to stop.
The border can be secured. We have the technology we have the ability to stop this invasion. We must know who is coming and they must come in an organized manner legally so that we can assimilate them into our population and protect the sovereignty of our country. We are a nation of laws. We have a responsibility to protect our citizens and to protect the integrity of our country and the government which we live under.

I would give amnesty today to many, but here is the problem, we dare not do this until the Border is secure. It will do no good to forgive them because thousands will come behind them and we will be over run to the point that there will no longer be the United States of America but a North American Union of open borders. I ask you what form of government will we live under? How long will it be before we will be just like Mexico , Canada or any of the other Central American or South American countries? We have already lost our language, everything must be printed in Spanish also. We have already lost our history it is no longer taught in our schools. And we have lost our borders.

The leftist media has distorted what SB 1070 will do. It is not going to set up a Nazi Germany . Are you kidding. The ACLU and the leftist courts will do everything to protect those who are here illegally, but it was an effort to try and stop illegal’s from setting up businesses, and employment, and receiving state services and give the ability to local law enforcement when there is probable cause like a traffic stop to determine if they are here legally. Federal law is very clear if you are here on a visa you must have your papers on you at all times. That is the law. In Arizona all you need to show you are a legal citizen is a driver license, MVD identification card, Native American Card, or a Military ID. This is what you need to vote, get a hunting license, etc.. So nothing new has been added to this law. No one is going to be stopped walking down the street etc… The Socialist who are in power in DC are angry because we dare try and do something and that something the Socialist wants us to do is just let them come. They want the “Transformation” to continue.

Maybe it is too late to save America . Maybe we are not worthy of freedom anymore. But as an elected official I must try to do what I can to protect our Constitutional Republic . Living in America is not a right just because you can walk across the border. Being an American is a responsibility and it comes by respecting and upholding the Constitution the law of our land which says what you must do to be a citizen of this country. Freedom is not free.

Here’s a solution to all the controversy over full-body scanners at
the airports.

Have a booth that you can step into that does not x-ray
you, but detonates any explosive device you have on you.

It would be a win-win for everyone, and there would be none of this
crap about racial profiling!

This method would eliminate long and expensive trials.

Justice would be quick and swift. Case Closed!

This is so simple that it’s brilliant.

I can see it now; you’re in the airport terminal and you hear a muffled explosion.

Shortly after would be an announcement over the PA system;

“Attention standby passengers, we now have a seat available on flight number…”

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One day a florist went to a barber for a haircut. After the cut, he asked about his bill, and the barber replied, ‘I cannot accept money from you, I’m doing community service this week.’ The florist was pleased and left the shop.

When the barber went to open his shop the next morning, there was a ‘thank you’ card and a dozen roses waiting for him at his door.

Later, a cop comes in for a haircut, and when he tries to pay his bill, the barber again replied, ‘I cannot accept money from you, I’m doing community service this week.’ The cop was happy and left the shop.

The next morning when the barber went to open up, there was a ‘thank you’ card and a dozen donuts waiting for him at his door.

Then a Congressman came in for a haircut, and when he went to pay his bill, the barber again replied, ‘I can not accept money from you. I’m doing community service this week.’ The Congressman was very happy and left the shop.

The next morning, when the barber went to open up, there were a dozen Congressmen lined up waiting for a free haircut.

And that, my friends, illustrates the fundamental difference between the citizens of our country and the politicians who run it.

Now this really took some thinking…

The object of the game is to destroy American capitalism by having the government take over everything!

Want to play?  No??? Too bad, you’re already playing…  and just don’t know it.

By Charlie Reese

Politicians are the only people in the world  who create problems and then campaign against them.

Have you ever  wondered, if both the Democrats and the Republicans are against deficits, WHY do we have deficits?

Have you ever wondered, if  all the politicians are against inflation and high taxes, WHY do we have  inflation and high taxes?

You and I don’t propose a federal budget.  The president does.

You and I don’t have the  Constitutional authority to vote on appropriations. The House of  Representatives does.

You and I don’t write the tax code, Congress  does.

You and I don’t set fiscal policy, Congress does.

You  and I don’t control monetary policy, the Federal Reserve  Bank does.

One hundred senators, 435 congressmen, one  president, and nine Supreme Court justices equates to 545 human  beings out of the 300 million are directly, legally, morally,  and individually responsible for the domestic problems that plague  this country.

I excluded the members of the Federal Reserve  Board because that problem was created by the  Congress..   In 1913, Congress delegated its Constitutional duty  to provide a sound currency to a federally chartered, but private, central  bank.

I excluded all the special interests and lobbyists for a  sound reason.. They have no legal authority.  They have no  ability to coerce a senator, a congressman, or a president to do one  cotton-picking thing.   I don’t care if they offer a politician $1 million dollars in cash.  The  politician has the power to accept or reject it. No matter what  the lobbyist promises, it is the legislator’s responsibility  to determine  how he votes.

Those 545 human beings spend much of their energy  convincing you that what they did is not their fault.    They cooperate in this common con regardless of party.
What  separates a politician from a normal human being is an  excessive amount of gall.   No normal  human being would have the gall of a  Speaker, who stood up and criticized the President for creating  deficits..   The president can only propose a budget.    He cannot force the Congress to accept  it.

The Constitution, which is the supreme law of the  land, gives sole responsibility to the House of  Representatives for originating and approving appropriations and taxes.   Who is the speaker of the House?    Nancy Pelosi.  She is  the leader of the majority party.  She and  fellow House members, not the president, can approve any budget they want.  If the president vetoes it, they can pass it over his veto if  they agree  to.

It seems inconceivable to me that a nation of 300 million can  not replace 545 people who stand convicted — by present facts — of  incompetence and irresponsibility.   I can’t think of a  single domestic problem  that is not traceable directly to those 545 people.  When you fully  grasp the plain truth that 545 people exercise the power of the federal  government, then it must follow that what exists is what they want to  exist.

If the tax code is unfair, it’s because they want it  unfair.

If the budget is in the red, it’s because they want it in  the red ..

If the Army & Marines are in  IRAQ ,  it’s because they want them in IRAQ

If they do not  receive social security but are on an elite retirement plan not available  to the people, it’s because they want it that way.

There are no  insoluble government problems.

Do not let these 545 people shift  the blame to bureaucrats, whom they hire and whose jobs they can  abolish; to lobbyists, whose gifts and advice they can reject; to  regulators, to whom they give the power to regulate and from whom they can  take this power.   Above all, do not let them con you into  the belief that there exists disembodied mystical forces like “the  economy,” “inflation,” or “politics” that prevent them from doing  what they take an oath to do.

Those 545 people, and they  alone, are responsible.

They, and they alone, have the  power.

They, and they alone, should be held accountable by the  people who are their bosses.

Provided the voters have the  gumption to manage their own employees.

We should vote all of  them out of office and clean up their mess!

Charlie Reese is a former columnist of the Orlando Sentinel  Newspaper.

What you do with this article now that you have  read it………. Is up to you.

This might be funny if it weren’t so darned true.