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11/11/2008

No snake oils allowed

It took so many years and a big bust to realise how dangerous the pseudo bonds and notes were. Many the world over were mesmerised by the 'sophistications' of these derivatives and other similar products like CDOs and credit default swaps. As long as they are from Wall Street, as long as the Americans think that they are good, who is wiser to say no to these products. We do now although many still think that there is nothing wrong with such products. Whole industry has sprung up to service and participate in the euphoria of these high earning and high growth financial snake oils. Their failure will now see the industry collapses and many people going out of job. No one is going to touch any of these derivatives for a long time to come. But they will mutate and sneak in again in different forms. Hopefully everyone will be wiser and more careful in scrutinising any such products in the future. There are similar products in the stock markets that are no better than snake oils. There are many highly sophisticated instruments being peddled to the unsophisticated punters who just know how to punt without the knowledge or ability to understand how they work. And there are the flawed IPOs that should never be listed at all but only through the collusion of a number of participants that made them possible. And the end result is that they collapsed within a few years but after taking all the money from the innocent investors. So far no one has been taken to task or held accountable for such misleading IPOs and products. The auditors and rating agencies and issue managers just pat their backside and life goes on as if nothing happens. The investors who lost their monies are expected to accept their fate as a bad choice, as something inevitable. It is time to stop snake oils from being peddled to innocent investors. No snake oil or tainted milk is allowed in our financial system. We have seen it, know what they are. There is no reason to let it be and do nothing. It is irresponsible to let them come in after seeing the dangers they pose to the investors. We must be responsible to ensure that innocent investors are protected from snake oils and tainted milk.

9 comments:

Anonymous said...

Aren't rating agencies and auditors supposed to be watchdogs? I guess they now have a hand in the till as well, so don't ever trust watchdogs. Talking about trustworthy men, there aren't any left in this world. Trust yourself.

Matilah_Singapura said...

> It is time to stop snake oils from being peddled to innocent investors. <

Absolute nonsense.

There are no such thing as "innocent" investors.

One man's snake oil is another man's pot of gold.

Many of the more intelligent and "reality based" managers were SHORTING these mortgaged-based securities. These folks won in the zero-sum game of trading in financial markets because they didn't believe in bullshit and decided to sell-off the rubbish, instead of buying and holding bullshit.

God bless the liars, the ignorant and the unwise. If not for their follies and foibles fewer arbitrage opportunities would exist.

redbean said...

what about the administrators that created the irregularities to allow arbitrage opportunities?

Matilah_Singapura said...

If there is an arbitrage opportunity in the market, take it. If you don't, someone else will.

Anyway, the only people who can effectively "control" the market to any degree is the govt.

Aust just introduced legislation to ban naked shorting.

This has bad consequences.

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