and its effort to explain how we got into the situation we're in? Among other things, it was asserted that the credit default swaps game produced a potential liability of 60 Trillion (!) dollars based on the potential mortgage defaults of a very small fraction of that number. Anyone care to explain that or should I continue to believe that the CDS game was simply a massive casino (betting on the red or the black, sir?) that had nothing to do with insuring the underlying "securities" that contained some non performing mortgage loans?

What people fail to understand is that almost the whole of what is laughingly referred to as "the Market" is a casino. The idea of companies issuing stock is to sell shares of the company in exchange for cash to be used by the company in carrying out its business. The investor is rewarded for being an owner by receiving a dividend which is a share of the profit. The idea of a company issuing bonds is to borrow money for some limited period time so as to have working capital without diluting the ownership of the company. No subsequent sales of either the stocks or the bonds has a direct effect on the assets of the company, unless the company is one of the parties to the sale. Because additional stocks and bonds are usually issued at prices which are in line with the current trading prices of the already issued securities, there is an indirect effect. Almost every other transaction which takes place in the Market is, at the best, speculation and at the worst just gambling. These would not be important if it wasn't that these non-productive exchanges are destructive of the orderliness of the real economy, which functions to support the production, distribution, and consumption of goods and (in increasing amount) services. Many of the "services" which occupy a goodly portion of our economy are merely to support the speculation and gambling and produce nothing which can actually be consumed. Finance has far outstripped manufacturing in the US, and we should all, by now, recognize how destructive a trend that is.

I too have not read any journos even TRYING to explain how CDS's amount to $56 Trilion. I suspect the reason is they can't do arithmetic and their heads are full of the nonsense called "economics."

There must be some kind of multiple-counting as when insurance companies reinsure and pass on original coverages from company to company. Among insurers, however, the original coverage doesn't get double-counted, except perhaps when it reaches the world of media.

I shall explore the counting process. It seems perhaps unravellable from snippets about AIG. But maybe not. As a former insurance exec myself, I recall that numbers from AIG always seemed weird and not in keeping with the numbers-world of, say, a Northwestern Mutual, or similar company. And the entire matter seems to give off a very bad smell from -- you guessed it -- the auditors. Many insurance execs are perplexed as to what they actually do besides extremely expensive printing of copied data.

Or maybe it's because the swaps aren't really insurance. In reinsurance, for example, the underlying liability remains fixed while different reinsurers are responsible for portions of the underlying liability. If, with the swaps, we were only dealing with the original liability, the situation would not be dire and would not approach 700 billion.

So far, I surmise that there are original risks taken on by CDS buyers -- including mortgages and corporate bonds. I also surmise that CDS buyers are paid some kind of insurance premium. However, the buyers are not able to pay much in claims -- they assume that there will be no "doomsday" and if there is a doomsday that the govt will print money.

The entire system rests on the "no doomsday" assumption, which is very popular even in old-line insurance circles. For example, life insurers scoff at the idea of a pandemic upsurge in mortality from birdflu or a mystery virus. They assume blithely that reinsurers can and will pay claims thru severe mortality, which is doubtful esp for Group Term life coverages.

With CDS's, the claims have STARTED to mount. Any "premiums" were booked as profits and out-bonused to their "genius" creators. Recession now creates a small probability of claims from corporate bonds, on top of mortgages.

The entire CDS mess could be canceled in ten seconds, yielding a return to normal fears. It IS illegal insurance and gambling where Wall St is "the house" and can't lose unless it gambles its own money.

Any firm with CDS 's is in trouble.

Thank you for using the word "gambling". I have been using it for some time to describe the great majority of the transaction which occur on "Wall Street" and which many are, due to either complacency or ignorance, calling "investing". I am sure there are Federal or state laws languishing in the background, waiting to be brought into play, to punish and reverse all of these illegal transactions. I just hope there are enough intact records to allow this without case by case investigation.

What we need desperately is corporate charters which spell out in detail what sort of actions each corporation is licensed to take. This might give the nation the additional leverage it needs in bypassing the uneven and tentative application of laws.

When anyone tries to over-diagnose a problem or "sin" like gambling, NObody pays attencion. Here we face doomsday from CDS and CMO. First we must define and solve those problems -- NOT cleanse every soul of Demon rum or Demon lust or Demon gambling or Mammon.

I don't care if your ancestor WAS High Priest of Gubernya Vilnitz!

I wasn't at all concerned by the concept of sin. [Incidentally, and completely off track, it struck me last night that all the gods of all the societies surrounding Judea and Judah seemed to enjoy frequent and uninhibited sex, leaving Yahweh alone and getting increasingly horney. Maybe the frequent wars were an inevitable outlet.] What I had in mind was that the laws concerning gambling were distinct from the laws concerning investing and that it might be a fruitful path to follow, leading hopefully to the incarceration of many whom most of the population has learned to hate.

Eiseyshok, if anywhere.

I gave the Gubernya (Province).

Was the name equivalent to Greater Vilna? I have a book which mentions my family several times, but it is really thick and folksy and I have not gotten around to reading it. It is "There Once was a World" by Yaffa Eliach.

Just imagine how different world history might be.