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The government has to do more than control hybrid derivative safeties and the institutions who underwrite them. They need to inject reason. Requiring public registrations and a violent regulative body are needed to guarantee public protection in future hybrid safety issuance's. Directors and officers of banks who play with others' money should obtain hefty charges when their bets fail. Both for the company's they represent and personally. They ought to lose all plethora they have collected and the built up plethora of their direct managers should be forfeited. Without repercussions these staff will create one more world financial disaster. Due to the fact that derivatives are complicated, I'm producing a metaphor to make them easier to comprehend for the easygoing reader as topics such as forensic auditors can easily be quite complicated.

Exactly what if General Motors were permitted to bet on the failing of a vehicle part? Visualize if they were permitted to get an insurance policy which paid them a million dollars every time a fuel injector failed on a Chevy Malibu and caught it on fire. What if GM persuaded an insurance business to payout when one of its very own items failed and injured somebody? And the repayment went to GM. Let's call these insurance contracts "GM injector default swaps" or "IDS's." Let's pretend that the insurance company has so much faith in the injectors that they over concern them because of their research on past injector failures. The insurance companies allow GM to put 50 or 100 of these bets out on each injector positioned in an auto. They let Joe Engineer buy them in his 401k even though he is producing the injectors. After all, injector failings have been extremely low and this seems like a no-brainer company decision from the actuaries at the insurance business. In their very own world, it represents a substantial amount of cost-free premium, with no danger, and another person marketing the contracts so exactly what the f *ck. Now let's merely say for argument's sake that there were companies in Detroit of reduced moral character, (probably right wing republicans) who chose to somehow persuade GM to change the design of the Malibu injector. Let's assume that they convinced GM engineers to design it to fail in order to profit themselves on the IDS's. Merely a little failure, no one truly gets hurt, but enough of a failure that causes IDS agreements. Let's even add to our metaphor that these business who convinced GM to produce their very own injectors to fail loaded up on the injector failure insurance contracts. Also though they recognize that the massive, too large to fail insurance business will be economically devastated, and that the business is of some considerable value to the United States economic situation; in fact the whole entire world economy due to the fact that of its enormity and exactly how many people and other morally functional companies depend on it for all kinds of insurance products.

They are convinced that the government will certainly conserve the insurance business if trillions of dollars are owed to these IDS holders because enabling the insurance business to fail will certainly create a lynch pin economic event. So their bets are thought to be secure. Let's pretend that convincing GM engineers to revamp the injectors to fail and load up on IDS' was more profitable to the GM pro-forma than developing and selling sound cars. They understand that this short term plan will certainly destroy the economic climate and harmed lots of people. They don't care because of the massive payday they will certainly get. They justify that the government might step in and bail out the insurance company (s) since of its (their) value to the economy. At the end of this game there are lots of dead bodies, but no one essential.

OK, let's put a new twist on this. Let's say that the business plan to offer autos with f*cked up injectors is starting to look so lucrative that GM chooses that offering these automobiles away to anybody who wished one might speed up and substantially boost the overall future IDS profits accruals to GM and its cohorts. Let's additionally say that the engineers can in fact make the injectors to fail after exactly 2 years of use. The 2 years will certainly give GM time to develop and give away an enormous amount of injector failure created Malibus to bet against. The 2 years will certainly give the insurance business, (who understand absolutely nothing of the injector failure design) a tremendous quantity of self-confidence in issuing the IDS's. The insurance company will really make billions of dollars on the insurance premiums over the 2 years. Their ignorance/naivete will cost them trillions beginning at the two year mark as they have not been privy to the flawed injector design charade. All is well in Detroit.

OK, quick forward. The two years have actually passed and the first buyers of reasonable Malibu's with defective injectors are starting to have injector failings. It's on the news, GM and their cohorts are laughing their asses off in closed door board room treatments. The capitalists in GM stocks and business bonds are not. The stock is getting pounded, the bonds are getting slammed. The GM managers choose to show S and P, Fitch and Moody's that they even more than covered for substandard injectors with their injector default swap purchases. The protections rebound and experienced analysts at Ford and Chrysler understand the show. They suggest their corporate directors to jump aboard and begin producing automobiles with flawed throttle bodies and substandard crank handles. Meanwhile they buy TBDS and CSDS protection from the huge insurance business and GM follows suit. Quickly all cars made in our cherished America are produced with substandard parts covered by flawed part insurance payable to greedy immoral b*stards. Automobiles stalled and burnt up all over our highways are not being paid for are being repossessed. Rich guys are cashing checks from the insurance companies who underwrote the IDS's and concurrently positioning substantial pressure on the government, the public and the fed to bail out the insurance business, or there might be economic catastrophe for all. They do not give a f*ck about the people who die in the burnt up vehicles or those who lose their autos ... Little cost for the uber rich to pay (a little smoke on the highway they just require view from their Lear Jet windows - it's hard to see from up there).

This is everything took place in our mortgage market. This is just how fast meals employees purchased half million dollar residences. The mortgages were produced to fail and awarded to anyone breathing so that hedge funds and bankers (Scion cap, John Paulson, Goldman Sachs ... the list is not that long however clearly differentiated) could make billions and billions betting against them. The moral hazard - It could well be the relaxing of our economy, the global economic situation and political military stability around the entire world.

My conclusion ... Just as long as we have business that are too large to fail and who are enabled to DEPEND on taxpayers to bail them out when they screw up, as evidenced by the current JP Morgan Chase - Jamie Dimon fiasco, we individuals have to make d*mn certain that just how they do company is safe. They need to be managed. Violently managed. Better yet, they ought to have been allowed to fail.

Jeff Greenberg Legal Forensic Auditors