What caused the national debt?

[Neotrotsky]

In some cases that might be the right determination and the proper course. In OTHER cases that would be quite foolish.

It is ridiculously high levels of spending that created this mess. Addressing THAT problem is the way out.

No, Reagan and the two Bushes created most of the National Debt by lowering taxes for the rich.

Then Bush let his buddies on Wall Street run a $516 TRILLION DOLLAR derivative Ponzi scheme that ruined the economy.

That is why we are in this mess.

ReaganBushDebt.org

Financial Weapons of Mass Destruction: A $516 Trillion Derivatives 'Time-Bomb'

You never did prove the silly claim that derivatives caused the crisis.
Did you hear that from Michael Moore?

The biggest problem for us will be entitlements- the True 'weapons of mass destruction' for our economy


Three Little Pigs: How Entitlements Will Destroy Us

In the next few years, our major entitlement programs, in particular Social Security and Medicare, will begin to run cash-flow deficits, adding hundreds of billions each year to the debt. In fact, Social Security's total unfunded liabilities top $15.8 trillion, and depending on what accounting measure is used, Medicare's future shortfall could exceed $100 trillion.​

Nor can you tax your way out of debt. Eliminate all of the Bush tax cuts, including the tax cuts for low- and middle-income Americans, and you would reduce the debt by perhaps 10% — assuming you didn't cripple the economy in the process. Tax the rich? That won't get you there either. In fact, according to the Congressional Budget Office, in order to pay for all currently scheduled federal spending would require raising both the corporate tax rate and top income tax rate from their current 35% to 88%, the current 25% tax rate for middle-income workers to 63%, and the 10% tax bracket for low-income workers to 25%.​

 

[Chris]

The top 400 U.S. individual taxpayers got 1.59% of the nation’s household income in 2007, according to their tax returns, three times the slice they got in the 1990s, according to the Internal Revenue Service. They paid 2.05% of all individual income taxes in that year.

In its annual update of the taxes paid by the 400 best-off taxpayers, who aren’t identified, the IRS also said that only 220 of the top 400 were in the top marginal tax bracket. The 400 best-off taxpayers paid an average tax rate of 16.6%, lower than in any year since the IRS began making the reports in 1992.

To make the top 400, a taxpayer had to have income of more than $138.8 million. As a group, the top 400 reported $137.9 billion in income, and paid $22.9 billion in federal income taxes.

About 81.3% of the income of the top 400 households came in the form of capital gains, dividends or interest, the IRS data show. Only 6.5% came in the form of salaries and wages.

Top 1%: Lower Tax Rate Than Their Secretaries | OurFuture.org

 

[Neotrotsky]

CNN Poll: Two Thirds of Americans Support 'Cut, Cap, and Balance' Plan
Sad that the Democrats are going against the wishes of the American people

No one, except those on the extreme Left, believes we have a taxing problem

The US has a spending problem

 

[Chris]

WASHINGTON, D.C.--The 400 highest-earning taxpayers in the U.S. reported a record $105 billion in total adjusted gross income in 2006, but they paid just $18 billion in tax, new Internal Revenue Service figures show. That works out to an average federal income tax bite of 17%--the lowest rate paid by the richest 400 during the 15-year period covered by the IRS statistics. The average federal tax bite on the top 400 was 30% in 1995 and 23% in 2002.

Richest 400 Earn More, Pay Lower Tax Rate - Forbes.com

 

[Neotrotsky]

Nearly half of US households escape fed income tax


AP poll shows 6 in 10 Americans want spending cuts, not tax hikes


How much more does the Left really want from the paying half

 

[Chris]

Nearly half of US households escape fed income tax


AP poll shows 6 in 10 Americans want spending cuts, not tax hikes


How much more does the Left really want from the paying half

I am glad you agree that we need to raise taxes.

 

[Toddsterpatriot]

Warren Buffett, the third-richest man in the world, has criticised the US tax system for allowing him to pay a lower rate than his secretary and his cleaner.

Speaking at a $4,600-a-seat fundraiser in New York for Senator Hillary Clinton, Mr Buffett, who is worth an estimated $52 billion (£26 billion), said: “The 400 of us [here] pay a lower part of our income in taxes than our receptionists do, or our cleaning ladies, for that matter. If you’re in the luckiest 1 per cent of humanity, you owe it to the rest of humanity to think about the other 99 per cent.”

Mr Buffett said that he was taxed at 17.7 per cent on the $46 million he made last year, without trying to avoid paying higher taxes, while his secretary, who earned $60,000, was taxed at 30 per cent. Mr Buffett told his audience, which included John Mack, the chairman of Morgan Stanley, and Alan Patricof, the founder of the US branch of Apax Partners, that US government policy had accentuated a disparity of wealth that hurt the economy by stifling opportunity and motivation.

Buffett blasts system that lets him pay less tax than secretary - Times Online

Wow! You love to repeat Buffett's lie.

In 2006, here were the rates.

$0-$7550 10% $755

$7550-$30650 15% +$755

$30650-$74220 25% +$4220

If his secretary took the standard deduction and exemption, $5150 and $3300,
her taxes would be $9445 on AGI of $51550. 18% of AGI or 15.7% of gross income.

That doesn't include all taxes.

Nice try though.

He said, "The 400 of us [here] pay a lower part of our income in taxes"

Which income taxes aren't included?

 

[Liability]

The list of America's 400 richest is very nice, but they own less than 2% of America's wealth.
I want the list of the 400 that Chris imagined owned more than 50% of America's wealth.
Let me know when you pull that list together, amigo.

I believe that what he (and fat boy Michael Moore) are contending is that the wealth of the richest 400 combined is more than the combined wealth of the bottom 50% of America. So that would mean that the bottom 50% of Americans (as determined by "wealth") own less in total value, combined, than the combined wealth of the top 400.

PolitiFact assessed the statement as "true." The calculations are a bit murky. But even if it's nominally true, that still has NOTHING to do with the silly claim that this constitutes a plutocracy. It doesn't.

Yeah, the difference between half of America's wealth and the wealth of the bottom half of Americans is huge.

True dat.

If you combine the total wealth of every person on my block, I am quite sure we don't equal anything close to even a half of what some of the rich guys on the top 400 Americans list EARN in one year.

He'p me. He'p me. I am bein' all oppressed and shit.

 

[Toddsterpatriot]

No, Reagan and the two Bushes created most of the National Debt by lowering taxes for the rich.

Then Bush let his buddies on Wall Street run a $516 TRILLION DOLLAR derivative Ponzi scheme that ruined the economy.

That is why we are in this mess.

ReaganBushDebt.org

Financial Weapons of Mass Destruction: A $516 Trillion Derivatives 'Time-Bomb'

You never did prove the silly claim that derivatives caused the crisis.
Did you hear that from Michael Moore?

Not for nothing did US billionaire Warren Buffett call them the real 'weapons of mass destruction'

The market is worth more than $516 trillion, (£303 trillion), roughly 10 times the value of the entire world's output: it's been called the "ticking time-bomb".


It's a market in which the lead protagonists – typically aggressive, highly educated, and now wealthy young men – have flourished in the derivatives boom. But it's a market that is set to come to a crashing halt – the Great Unwind has begun.

Last week the beginning of the end started for many hedge funds with the combination of diving market values and worried investors pulling out their cash for safer climes.

Some of the world's biggest hedge funds – SAC Capital, Lone Pine and Tiger Global – all revealed they were sitting on double-digit losses this year. September's falls wiped out any profits made in the rest of the year. Polygon, once a darling of the London hedge fund circuit, last week said it was capping the basic salaries of its managers to £100,000 each. Not bad for the average punter but some way off the tens of millions plundered by these hotshots during the good times. But few will be shedding any tears.

The complex and opaque derivatives markets in which these hedge funds played has been dubbed the world's biggest black hole because they operate outside of the grasp of governments, tax inspectors and regulators. They operate in a parallel, shadow world to the rest of the banking system. They are private contracts between two companies or institutions which can't be controlled or properly assessed. In themselves derivative contracts are not dangerous, but if one of them should go wrong – the bad 2 per cent as it's been called – then it is the domino effect which could be so enormous and scary.

Financial Weapons of Mass Destruction: A $516 Trillion Derivatives 'Time-Bomb'

Warren is a proven liar.
Your excerpt lacks evidence that derivatives caused the crisis.
Try again?

 

[Neotrotsky]

Nearly half of US households escape fed income tax


AP poll shows 6 in 10 Americans want spending cuts, not tax hikes


How much more does the Left really want from the paying half

I am glad you agree that we need to raise taxes.

really ?

It is spending cuts we need
since we have a spending problem

 

[dilloduck]

What caused the national debt? 6 culprits - The Week

1. The Bush tax cuts
The biggest culprit? The 2001 and 2003 tax cuts under then-president George W. Bush, says the Associated Press. They have added an estimated $1.6 trillion to the national debt. It's pretty clear, says Brian Beutler at Talking Points Memo, that Bush-era policies, "particularly debt-financed tax cuts," make up "the lion's share of the problem." And they're ongoing, so the tab for them builds every year.

2. Health care entitlements
Democrats "constantly harp" about the Bush tax cuts, says Peter Morici at Seeking Alpha, but those rates were in place in 2007, and the deficit that year was one-tenth this year's budget shortfall of $1.6 trillion. So what has changed since then? Added "federal regulation, bureaucracy, and new Medicaid and other entitlements have pushed up federal spending by $1.1 trillion — $900 billion more than required by inflation." And down the road, says Yuval Levin at National Review, our "health-entitlement explosion" will account for "basically 100 percent" of our debt problem.

3. Medicare prescription drug benefit
Another piece of the pie: George W. Bush's addition of Medicare's prescription drug benefit. That has added $300 billion to the debt, according to the AP. Expanding entitlements like Medicare, or last year's health-care reform package, is a particularly tempting way for Congress to run up debt, says Jagadeesh Gokhale at The Daily Caller. Since lawmakers don't typically map out a revenue strategy to fund those benefits, they are "shielded from the political costs of actually paying for the new programs."

4. The wars in Iraq and Afghanistan
The tab for the wars in Iraq and Afghanistan comes to $1.3 trillion, another major chunk of new, unexpected spending over the last decade. "These wars cost us plenty," says Nake M. Kamrany at The Huffington Post, and they "have to be financed with borrowing, which adds up to national debt."

5. Obama's economic stimulus
The 2009 stimulus package enacted by President Obama cost $800 billion. And the 2010 tax-cut compromise between Obama and Republicans, which extended jobless benefits and reduced payroll taxes, added another $400 billion to the debt. Add another $200 billion for the 2008 bailout of the financial industry, and the government's efforts to soften the blow of the Great Recession amount to one of the largest chunks of the debt build-up. The "federal budget was one good year away from balancing" after 2007, says Tom Blumer at News Busters. But in the years since, Obama and Democrats in Congress put that goal out of reach.

6. The Great Recession
Some of the spending gap came from factors outside the control of Congress and the White House. As the government spent heavily to boost the economy, says the AP, it took in hundreds of billions less in tax revenue than expected, because the Great Recession eroded Americans' income and spending.

Borrowing money that we have to pay back with interest to buy things that we can't afford nor do we really need.

 

[Chris]

You never did prove the silly claim that derivatives caused the crisis.
Did you hear that from Michael Moore?

Not for nothing did US billionaire Warren Buffett call them the real 'weapons of mass destruction'

The market is worth more than $516 trillion, (£303 trillion), roughly 10 times the value of the entire world's output: it's been called the "ticking time-bomb".


It's a market in which the lead protagonists – typically aggressive, highly educated, and now wealthy young men – have flourished in the derivatives boom. But it's a market that is set to come to a crashing halt – the Great Unwind has begun.

Last week the beginning of the end started for many hedge funds with the combination of diving market values and worried investors pulling out their cash for safer climes.

Some of the world's biggest hedge funds – SAC Capital, Lone Pine and Tiger Global – all revealed they were sitting on double-digit losses this year. September's falls wiped out any profits made in the rest of the year. Polygon, once a darling of the London hedge fund circuit, last week said it was capping the basic salaries of its managers to £100,000 each. Not bad for the average punter but some way off the tens of millions plundered by these hotshots during the good times. But few will be shedding any tears.

The complex and opaque derivatives markets in which these hedge funds played has been dubbed the world's biggest black hole because they operate outside of the grasp of governments, tax inspectors and regulators. They operate in a parallel, shadow world to the rest of the banking system. They are private contracts between two companies or institutions which can't be controlled or properly assessed. In themselves derivative contracts are not dangerous, but if one of them should go wrong – the bad 2 per cent as it's been called – then it is the domino effect which could be so enormous and scary.

Financial Weapons of Mass Destruction: A $516 Trillion Derivatives 'Time-Bomb'

Warren is a proven liar.
Your excerpt lacks evidence that derivatives caused the crisis.
Try again?

As we celebrate year three of the Great Financial Crisis with the first official bailout of an entire country (Greece), I’m still astounded by the complete and utter lack of coverage the underlying cause of this Crisis has received.

Tens of thousands, if not hundreds of thousands of articles and research reports have been written about the Crisis, and yet I would wager less than 1% of them actually bother talking about what caused it, let alone how the various efforts to stop it have in fact FAILED to address this key issue.

Remember back in 2007? At that time we were told it was all about Subprime mortgages. Then in 2008, we were told it was the investment banks, specifically Lehman Brothers’ (LEHMQ.PK) failure and AIG’s credit default swaps. In 2009, we were told it was poor accounting standards and bad bets made by Wall Street. And here we are in 2010, and we’re still being told it was simply bad bets made by Wall Street.

All of these answers are partially right, but none of them are totally 100% accurate. Why? Because they fail to address the one underlying issue that links ALL of these items. I’m talking about the Black Hole of Finance: a bottomless pit that no official or regulator bothers mentioning in public because acknowledging it would mean acknowledging that all of the efforts to stop the Crisis are truly paltry.

What caused the Crisis?

Derivatives.

You’ve probably heard this term before, or have some vague understanding of what the term means. But the actual reality of derivatives and what they represent for the financial markets remains a topic no one in the mainstream media (or the regulators for that matter) wants to touch.

Why?

Let’s do some quick math.

If you add up the value of every stock on the planet, the entire market capitalization would be about $36 trillion. If you do the same process for bonds, you’d get a market capitalization of roughly $72 trillion.

The notional value of the derivative market is roughly $1.4 QUADRILLION.

I realize that number sounds like something out of Looney tunes, so I’ll try to put it into perspective.

$1.4 Quadrillion is roughly:

-40 TIMES THE WORLD’S STOCK MARKET.

-10 TIMES the value of EVERY STOCK & EVERY BOND ON THE PLANET.

-23 TIMES WORLD GDP.

Why Derivatives Caused Financial Crisis - Seeking Alpha

 

[dilloduck]

Not for nothing did US billionaire Warren Buffett call them the real 'weapons of mass destruction'

The market is worth more than $516 trillion, (£303 trillion), roughly 10 times the value of the entire world's output: it's been called the "ticking time-bomb".


It's a market in which the lead protagonists – typically aggressive, highly educated, and now wealthy young men – have flourished in the derivatives boom. But it's a market that is set to come to a crashing halt – the Great Unwind has begun.

Last week the beginning of the end started for many hedge funds with the combination of diving market values and worried investors pulling out their cash for safer climes.

Some of the world's biggest hedge funds – SAC Capital, Lone Pine and Tiger Global – all revealed they were sitting on double-digit losses this year. September's falls wiped out any profits made in the rest of the year. Polygon, once a darling of the London hedge fund circuit, last week said it was capping the basic salaries of its managers to £100,000 each. Not bad for the average punter but some way off the tens of millions plundered by these hotshots during the good times. But few will be shedding any tears.

The complex and opaque derivatives markets in which these hedge funds played has been dubbed the world's biggest black hole because they operate outside of the grasp of governments, tax inspectors and regulators. They operate in a parallel, shadow world to the rest of the banking system. They are private contracts between two companies or institutions which can't be controlled or properly assessed. In themselves derivative contracts are not dangerous, but if one of them should go wrong – the bad 2 per cent as it's been called – then it is the domino effect which could be so enormous and scary.

Financial Weapons of Mass Destruction: A $516 Trillion Derivatives 'Time-Bomb'

Warren is a proven liar.
Your excerpt lacks evidence that derivatives caused the crisis.
Try again?

As we celebrate year three of the Great Financial Crisis with the first official bailout of an entire country (Greece), I’m still astounded by the complete and utter lack of coverage the underlying cause of this Crisis has received.

Tens of thousands, if not hundreds of thousands of articles and research reports have been written about the Crisis, and yet I would wager less than 1% of them actually bother talking about what caused it, let alone how the various efforts to stop it have in fact FAILED to address this key issue.

Remember back in 2007? At that time we were told it was all about Subprime mortgages. Then in 2008, we were told it was the investment banks, specifically Lehman Brothers’ (LEHMQ.PK) failure and AIG’s credit default swaps. In 2009, we were told it was poor accounting standards and bad bets made by Wall Street. And here we are in 2010, and we’re still being told it was simply bad bets made by Wall Street.

All of these answers are partially right, but none of them are totally 100% accurate. Why? Because they fail to address the one underlying issue that links ALL of these items. I’m talking about the Black Hole of Finance: a bottomless pit that no official or regulator bothers mentioning in public because acknowledging it would mean acknowledging that all of the efforts to stop the Crisis are truly paltry.

What caused the Crisis?

Derivatives.

You’ve probably heard this term before, or have some vague understanding of what the term means. But the actual reality of derivatives and what they represent for the financial markets remains a topic no one in the mainstream media (or the regulators for that matter) wants to touch.

Why?

Let’s do some quick math.

If you add up the value of every stock on the planet, the entire market capitalization would be about $36 trillion. If you do the same process for bonds, you’d get a market capitalization of roughly $72 trillion.

The notional value of the derivative market is roughly $1.4 QUADRILLION.

I realize that number sounds like something out of Looney tunes, so I’ll try to put it into perspective.

$1.4 Quadrillion is roughly:

-40 TIMES THE WORLD’S STOCK MARKET.

-10 TIMES the value of EVERY STOCK & EVERY BOND ON THE PLANET.

-23 TIMES WORLD GDP.

Why Derivatives Caused Financial Crisis - Seeking Alpha

How is raising the debt ceiling going to help that problem ?

 

[Toddsterpatriot]

Not for nothing did US billionaire Warren Buffett call them the real 'weapons of mass destruction'

The market is worth more than $516 trillion, (£303 trillion), roughly 10 times the value of the entire world's output: it's been called the "ticking time-bomb".


It's a market in which the lead protagonists – typically aggressive, highly educated, and now wealthy young men – have flourished in the derivatives boom. But it's a market that is set to come to a crashing halt – the Great Unwind has begun.

Last week the beginning of the end started for many hedge funds with the combination of diving market values and worried investors pulling out their cash for safer climes.

Some of the world's biggest hedge funds – SAC Capital, Lone Pine and Tiger Global – all revealed they were sitting on double-digit losses this year. September's falls wiped out any profits made in the rest of the year. Polygon, once a darling of the London hedge fund circuit, last week said it was capping the basic salaries of its managers to £100,000 each. Not bad for the average punter but some way off the tens of millions plundered by these hotshots during the good times. But few will be shedding any tears.

The complex and opaque derivatives markets in which these hedge funds played has been dubbed the world's biggest black hole because they operate outside of the grasp of governments, tax inspectors and regulators. They operate in a parallel, shadow world to the rest of the banking system. They are private contracts between two companies or institutions which can't be controlled or properly assessed. In themselves derivative contracts are not dangerous, but if one of them should go wrong – the bad 2 per cent as it's been called – then it is the domino effect which could be so enormous and scary.

Financial Weapons of Mass Destruction: A $516 Trillion Derivatives 'Time-Bomb'

Warren is a proven liar.
Your excerpt lacks evidence that derivatives caused the crisis.
Try again?

As we celebrate year three of the Great Financial Crisis with the first official bailout of an entire country (Greece), I’m still astounded by the complete and utter lack of coverage the underlying cause of this Crisis has received.

Tens of thousands, if not hundreds of thousands of articles and research reports have been written about the Crisis, and yet I would wager less than 1% of them actually bother talking about what caused it, let alone how the various efforts to stop it have in fact FAILED to address this key issue.

Remember back in 2007? At that time we were told it was all about Subprime mortgages. Then in 2008, we were told it was the investment banks, specifically Lehman Brothers’ (LEHMQ.PK) failure and AIG’s credit default swaps. In 2009, we were told it was poor accounting standards and bad bets made by Wall Street. And here we are in 2010, and we’re still being told it was simply bad bets made by Wall Street.

All of these answers are partially right, but none of them are totally 100% accurate. Why? Because they fail to address the one underlying issue that links ALL of these items. I’m talking about the Black Hole of Finance: a bottomless pit that no official or regulator bothers mentioning in public because acknowledging it would mean acknowledging that all of the efforts to stop the Crisis are truly paltry.

What caused the Crisis?

Derivatives.

You’ve probably heard this term before, or have some vague understanding of what the term means. But the actual reality of derivatives and what they represent for the financial markets remains a topic no one in the mainstream media (or the regulators for that matter) wants to touch.

Why?

Let’s do some quick math.

If you add up the value of every stock on the planet, the entire market capitalization would be about $36 trillion. If you do the same process for bonds, you’d get a market capitalization of roughly $72 trillion.

The notional value of the derivative market is roughly $1.4 QUADRILLION.

I realize that number sounds like something out of Looney tunes, so I’ll try to put it into perspective.

$1.4 Quadrillion is roughly:

-40 TIMES THE WORLD’S STOCK MARKET.

-10 TIMES the value of EVERY STOCK & EVERY BOND ON THE PLANET.

-23 TIMES WORLD GDP.

Why Derivatives Caused Financial Crisis - Seeking Alpha

The notional value of the derivative market is roughly $1.4 QUADRILLION

Why does notional value matter?

In 20 words or less. LOL!

Do you even know what notional value means?

 

[Chris]

Warren is a proven liar.
Your excerpt lacks evidence that derivatives caused the crisis.
Try again?

As we celebrate year three of the Great Financial Crisis with the first official bailout of an entire country (Greece), I’m still astounded by the complete and utter lack of coverage the underlying cause of this Crisis has received.

Tens of thousands, if not hundreds of thousands of articles and research reports have been written about the Crisis, and yet I would wager less than 1% of them actually bother talking about what caused it, let alone how the various efforts to stop it have in fact FAILED to address this key issue.

Remember back in 2007? At that time we were told it was all about Subprime mortgages. Then in 2008, we were told it was the investment banks, specifically Lehman Brothers’ (LEHMQ.PK) failure and AIG’s credit default swaps. In 2009, we were told it was poor accounting standards and bad bets made by Wall Street. And here we are in 2010, and we’re still being told it was simply bad bets made by Wall Street.

All of these answers are partially right, but none of them are totally 100% accurate. Why? Because they fail to address the one underlying issue that links ALL of these items. I’m talking about the Black Hole of Finance: a bottomless pit that no official or regulator bothers mentioning in public because acknowledging it would mean acknowledging that all of the efforts to stop the Crisis are truly paltry.

What caused the Crisis?

Derivatives.

You’ve probably heard this term before, or have some vague understanding of what the term means. But the actual reality of derivatives and what they represent for the financial markets remains a topic no one in the mainstream media (or the regulators for that matter) wants to touch.

Why?

Let’s do some quick math.

If you add up the value of every stock on the planet, the entire market capitalization would be about $36 trillion. If you do the same process for bonds, you’d get a market capitalization of roughly $72 trillion.

The notional value of the derivative market is roughly $1.4 QUADRILLION.

I realize that number sounds like something out of Looney tunes, so I’ll try to put it into perspective.

$1.4 Quadrillion is roughly:

-40 TIMES THE WORLD’S STOCK MARKET.

-10 TIMES the value of EVERY STOCK & EVERY BOND ON THE PLANET.

-23 TIMES WORLD GDP.

Why Derivatives Caused Financial Crisis - Seeking Alpha

The notional value of the derivative market is roughly $1.4 QUADRILLION

Why does notional value matter?

In 20 words or less. LOL!

Do you even know what notional value means?

Magnified dominoes.

 

[Toddsterpatriot]

As we celebrate year three of the Great Financial Crisis with the first official bailout of an entire country (Greece), I’m still astounded by the complete and utter lack of coverage the underlying cause of this Crisis has received.

Tens of thousands, if not hundreds of thousands of articles and research reports have been written about the Crisis, and yet I would wager less than 1% of them actually bother talking about what caused it, let alone how the various efforts to stop it have in fact FAILED to address this key issue.

Remember back in 2007? At that time we were told it was all about Subprime mortgages. Then in 2008, we were told it was the investment banks, specifically Lehman Brothers’ (LEHMQ.PK) failure and AIG’s credit default swaps. In 2009, we were told it was poor accounting standards and bad bets made by Wall Street. And here we are in 2010, and we’re still being told it was simply bad bets made by Wall Street.

All of these answers are partially right, but none of them are totally 100% accurate. Why? Because they fail to address the one underlying issue that links ALL of these items. I’m talking about the Black Hole of Finance: a bottomless pit that no official or regulator bothers mentioning in public because acknowledging it would mean acknowledging that all of the efforts to stop the Crisis are truly paltry.

What caused the Crisis?

Derivatives.

You’ve probably heard this term before, or have some vague understanding of what the term means. But the actual reality of derivatives and what they represent for the financial markets remains a topic no one in the mainstream media (or the regulators for that matter) wants to touch.

Why?

Let’s do some quick math.

If you add up the value of every stock on the planet, the entire market capitalization would be about $36 trillion. If you do the same process for bonds, you’d get a market capitalization of roughly $72 trillion.

The notional value of the derivative market is roughly $1.4 QUADRILLION.

I realize that number sounds like something out of Looney tunes, so I’ll try to put it into perspective.

$1.4 Quadrillion is roughly:

-40 TIMES THE WORLD’S STOCK MARKET.

-10 TIMES the value of EVERY STOCK & EVERY BOND ON THE PLANET.

-23 TIMES WORLD GDP.

Why Derivatives Caused Financial Crisis - Seeking Alpha

The notional value of the derivative market is roughly $1.4 QUADRILLION

Why does notional value matter?

In 20 words or less. LOL!

Do you even know what notional value means?

Magnified dominoes.

I bet $10 on the Cubs game yesterday.
What was the notional value of my bet?

 

[Liability]

Not for nothing did US billionaire Warren Buffett call them the real 'weapons of mass destruction'

The market is worth more than $516 trillion, (£303 trillion), roughly 10 times the value of the entire world's output: it's been called the "ticking time-bomb".


It's a market in which the lead protagonists – typically aggressive, highly educated, and now wealthy young men – have flourished in the derivatives boom. But it's a market that is set to come to a crashing halt – the Great Unwind has begun.

Last week the beginning of the end started for many hedge funds with the combination of diving market values and worried investors pulling out their cash for safer climes.

Some of the world's biggest hedge funds – SAC Capital, Lone Pine and Tiger Global – all revealed they were sitting on double-digit losses this year. September's falls wiped out any profits made in the rest of the year. Polygon, once a darling of the London hedge fund circuit, last week said it was capping the basic salaries of its managers to £100,000 each. Not bad for the average punter but some way off the tens of millions plundered by these hotshots during the good times. But few will be shedding any tears.

The complex and opaque derivatives markets in which these hedge funds played has been dubbed the world's biggest black hole because they operate outside of the grasp of governments, tax inspectors and regulators. They operate in a parallel, shadow world to the rest of the banking system. They are private contracts between two companies or institutions which can't be controlled or properly assessed. In themselves derivative contracts are not dangerous, but if one of them should go wrong – the bad 2 per cent as it's been called – then it is the domino effect which could be so enormous and scary.

Financial Weapons of Mass Destruction: A $516 Trillion Derivatives 'Time-Bomb'

Warren is a proven liar.
Your excerpt lacks evidence that derivatives caused the crisis.
Try again?

As we celebrate year three of the Great Financial Crisis with the first official bailout of an entire country (Greece), I’m still astounded by the complete and utter lack of coverage the underlying cause of this Crisis has received.

Tens of thousands, if not hundreds of thousands of articles and research reports have been written about the Crisis, and yet I would wager less than 1% of them actually bother talking about what caused it, let alone how the various efforts to stop it have in fact FAILED to address this key issue.

Remember back in 2007? At that time we were told it was all about Subprime mortgages. Then in 2008, we were told it was the investment banks, specifically Lehman Brothers’ (LEHMQ.PK) failure and AIG’s credit default swaps. In 2009, we were told it was poor accounting standards and bad bets made by Wall Street. And here we are in 2010, and we’re still being told it was simply bad bets made by Wall Street.

All of these answers are partially right, but none of them are totally 100% accurate. Why? Because they fail to address the one underlying issue that links ALL of these items. I’m talking about the Black Hole of Finance: a bottomless pit that no official or regulator bothers mentioning in public because acknowledging it would mean acknowledging that all of the efforts to stop the Crisis are truly paltry.

What caused the Crisis?

Derivatives.

You’ve probably heard this term before, or have some vague understanding of what the term means. But the actual reality of derivatives and what they represent for the financial markets remains a topic no one in the mainstream media (or the regulators for that matter) wants to touch.

Why?

Let’s do some quick math.

If you add up the value of every stock on the planet, the entire market capitalization would be about $36 trillion. If you do the same process for bonds, you’d get a market capitalization of roughly $72 trillion.

The notional value of the derivative market is roughly $1.4 QUADRILLION.

I realize that number sounds like something out of Looney tunes, so I’ll try to put it into perspective.

$1.4 Quadrillion is roughly:

-40 TIMES THE WORLD’S STOCK MARKET.

-10 TIMES the value of EVERY STOCK & EVERY BOND ON THE PLANET.

-23 TIMES WORLD GDP.

Why Derivatives Caused Financial Crisis - Seeking Alpha

1.4 Quadrillion?

It's gone up a LOT since October 2008? How can the derivatives market be worth more than the world's total financial assets? - By Jacob Leibenluft - Slate Magazine

That article also disputes the "figures lie and liars figure" type argument undergirding Chris' position:

But the "notional value" isn't usually a very good representation of what a contract might really be worth to the parties involved, or how much risk they are taking. (And it isn't easily compared with other measures of financial wealth—after all, owning the right to buy $5,000 worth of oil isn't the same as actually owning $5,000 of oil.) Within that $596 trillion are derivatives that effectively relate to the same assets—if you have a contract to buy euros in January and I have one to buy euros in April, we may end up buying the same currency, but its notional value will get counted twice. Moreover, in many instances, the "notional amount" is just a benchmark that never even changes hands—as in the case of the interest-rate swap, by far the most common type of derivative. Likewise, because derivatives are often used to hedge risks, there's a good probability that many contracts in the system essentially cancel one another out.

An alternative way to measure the size of the derivatives market is to calculate the instruments' market value—which refers to how much they would be worth if the contracts had to be settled today. Gross market value of all outstanding derivatives was $14.5 trillion at the end of 2007, less than one-fortieth of the $596 trillion estimate. (That number shrinks to about $3.3 trillion once you take into account contracts that directly offset one another.)

Hm. How about that? When common sense is introduced into the analysis, the notional value isn't 40 TIMES the total asset value, it is close to 100% OR less.

 

[Toddsterpatriot]

Warren is a proven liar.
Your excerpt lacks evidence that derivatives caused the crisis.
Try again?

As we celebrate year three of the Great Financial Crisis with the first official bailout of an entire country (Greece), I’m still astounded by the complete and utter lack of coverage the underlying cause of this Crisis has received.

Tens of thousands, if not hundreds of thousands of articles and research reports have been written about the Crisis, and yet I would wager less than 1% of them actually bother talking about what caused it, let alone how the various efforts to stop it have in fact FAILED to address this key issue.

Remember back in 2007? At that time we were told it was all about Subprime mortgages. Then in 2008, we were told it was the investment banks, specifically Lehman Brothers’ (LEHMQ.PK) failure and AIG’s credit default swaps. In 2009, we were told it was poor accounting standards and bad bets made by Wall Street. And here we are in 2010, and we’re still being told it was simply bad bets made by Wall Street.

All of these answers are partially right, but none of them are totally 100% accurate. Why? Because they fail to address the one underlying issue that links ALL of these items. I’m talking about the Black Hole of Finance: a bottomless pit that no official or regulator bothers mentioning in public because acknowledging it would mean acknowledging that all of the efforts to stop the Crisis are truly paltry.

What caused the Crisis?

Derivatives.

You’ve probably heard this term before, or have some vague understanding of what the term means. But the actual reality of derivatives and what they represent for the financial markets remains a topic no one in the mainstream media (or the regulators for that matter) wants to touch.

Why?

Let’s do some quick math.

If you add up the value of every stock on the planet, the entire market capitalization would be about $36 trillion. If you do the same process for bonds, you’d get a market capitalization of roughly $72 trillion.

The notional value of the derivative market is roughly $1.4 QUADRILLION.

I realize that number sounds like something out of Looney tunes, so I’ll try to put it into perspective.

$1.4 Quadrillion is roughly:

-40 TIMES THE WORLD’S STOCK MARKET.

-10 TIMES the value of EVERY STOCK & EVERY BOND ON THE PLANET.

-23 TIMES WORLD GDP.

Why Derivatives Caused Financial Crisis - Seeking Alpha

1.4 Quadrillion?

It's gone up a LOT since October 2008? How can the derivatives market be worth more than the world's total financial assets? - By Jacob Leibenluft - Slate Magazine

That article also disputes the "figures lie and liars figure" type argument undergirding Chris' position:

But the "notional value" isn't usually a very good representation of what a contract might really be worth to the parties involved, or how much risk they are taking. (And it isn't easily compared with other measures of financial wealth—after all, owning the right to buy $5,000 worth of oil isn't the same as actually owning $5,000 of oil.) Within that $596 trillion are derivatives that effectively relate to the same assets—if you have a contract to buy euros in January and I have one to buy euros in April, we may end up buying the same currency, but its notional value will get counted twice. Moreover, in many instances, the "notional amount" is just a benchmark that never even changes hands—as in the case of the interest-rate swap, by far the most common type of derivative. Likewise, because derivatives are often used to hedge risks, there's a good probability that many contracts in the system essentially cancel one another out.

An alternative way to measure the size of the derivatives market is to calculate the instruments' market value—which refers to how much they would be worth if the contracts had to be settled today. Gross market value of all outstanding derivatives was $14.5 trillion at the end of 2007, less than one-fortieth of the $596 trillion estimate. (That number shrinks to about $3.3 trillion once you take into account contracts that directly offset one another.)

Hm. How about that? When common sense is introduced into the analysis, the notional value isn't 40 TIMES the total asset value, it is close to 1% OR less.

Not that Chris will understand the explanation, but thanks.

I guess I can't brag about my winning $1.2 billion notional bet on the Cubs game yesterday.

 

[boedicca]

Warren Buffett, the third-richest man in the world, has criticised the US tax system for allowing him to pay a lower rate than his secretary and his cleaner.

It's always telling when someone who became Very Wealthy under a system wants to change it so that others are denied the opportunity to become wealthy.

 

[Oddball]

Warren Buffett, the third-richest man in the world, has criticised the US tax system for allowing him to pay a lower rate than his secretary and his cleaner.

Speaking at a $4,600-a-seat fundraiser in New York for Senator Hillary Clinton, Mr Buffett, who is worth an estimated $52 billion (£26 billion), said: “The 400 of us [here] pay a lower part of our income in taxes than our receptionists do, or our cleaning ladies, for that matter. If you’re in the luckiest 1 per cent of humanity, you owe it to the rest of humanity to think about the other 99 per cent.”

Mr Buffett said that he was taxed at 17.7 per cent on the $46 million he made last year, without trying to avoid paying higher taxes, while his secretary, who earned $60,000, was taxed at 30 per cent. Mr Buffett told his audience, which included John Mack, the chairman of Morgan Stanley, and Alan Patricof, the founder of the US branch of Apax Partners, that US government policy had accentuated a disparity of wealth that hurt the economy by stifling opportunity and motivation.

Buffett blasts system that lets him pay less tax than secretary - Times Online

He's always free to send in extra, but has he ever done so?...Nope.

Bumpkin.