Console Sales Plunge. WHY?

[|_emmiwinks]

exit52000 said:

Well Im 37 and I have a mortgage thank you lol.  I have also been following the markets a lot lately.  I personally feel that whoever was going to go bust has done and those that needed to be bailed out have been.  Well I can only speak for Britain.  Hopefully the worst is over and in the coming months the banks will start to relax somewhat.  Hopefully they wont make any silly investments in the future.  But who knows.

 

Not really, I mean I would love to say that the Bail out might help, but I dont think it will. I'll breifly explain the CDS scam.

A CDS kind of acts like insurance. You buy a 100 dollar bond, and then tell someone else, hey if I give you 2% of the value of this bond every year, will you give me the value of the bond now (100 dollars) if the company the bond is attacked to tanks.

So people liked this, but then realised that as they were written, you didnt need to own the bond that you insured. The best way of giving an example is if you know a dude, and he gets a million dollar life policy. As he starts to get sick, someone else gets a life insurance policy on him, then as he gets sicker another 100 people get million dollar policies on him, and then if hes about to die thousands do the same.

So he dies, his family gets the million, and so do these few thousand people that basically bet on him dying.

Well what happens to the poor Life Insurance policy? They now instead of paying out a million dollars, have to pay out a hundred million dollars on one dude.

This happened in the stock market ten fold that. Whats worse, is that a company with only a 100 million dollars would go and give a CDS to someone for a billion dollar company. Now they are charging 20% of that 1 billion dollar bonds worth, making themselves 20 million dollars a year. Its a good stream of money.Problem is, if that 1 billion dollar company goes bankrupt, then the company with only 100 million dollars owes someone a billion dollars.

Now these companys were doing this many many fold, right now the Captial to Debt ratio of the market is thought to be something like 6 trillion dollars in stocks and bonds, and 70 trillion dollars in speculation and debt.

I dont think 700 billion dollars will touch this problem, even worse, is that these companys started giving CDS to each other. So when one goes, other banks all owe even more banks billions of dollars that they dont have, so they go under, and MORE banks with CDS's on that now defunct bank go under, and so on and so on.

I highly recommend you download this http://www.thisamericanlife.org/Radio_Episode.aspx?episode=365 It explains everything I just explained, but in a far easier to understand way.

But really, Im sure if you looked all over you would see all sorts of luxury goods going south in sales.