Kucinich's GOP Opponent Jim Trakas Blames Daytrading, Not Predatory Lending For Financial Crisis

[JonLP24]

Source: Cleveland Ledger

Jim Trakas, the Republican running for Dennis Kucinich's seat in Congress, made some strange remarks in a debate yesterday. Trakas blamed daytrading for the nations financial mess and said that predatory lending, despite Cuyahoga County being regarded the epi-center of the mortgate meltdown that rippled through the nation, was not a big problem in Cleveland or the rest of the nation. Here are two comments:

TRAKAS: I would make prohibitive tax policy on short-term investing. These daytraders and the types of people who are just betting on things back and forth, that are unregulated.

TRAKAS: Predatory lending was a very small problem in Cleveland and across the country. Ninety percent of the problems we had were economic problems. People couldn’t afford these mortgages.

On the issue of the bailout Trakas said that he would support the bill but also said that he would do so reluctantly. Kucinich once again was adament in his disaproval of bailing out Wall Street at the American taxpayers expense, saying:

KUCINICH: This bailout has only been about helping the speculators on Wall Street.

KUCINICH: You solve this by creating a condition where you help the homeowners. And that’s exactly what I argued for in the caucus, on the floor of the house, I sent a letter to Nancy Pilosi yesterday. I said the only the way we can have a bill that’s viable is to help the homeowners by having the government purchase a controlling interest in these mortgage security pools, and then do a work-out for the homeowners. Otherwise, this is nothing but a handout to Wall Street.



Read more: http://www.clevelandleader.com/node/7030

[Joe Chi Minh]

1. I read the other day that even the mortgage problem was only about 5%

of the problem. The remaining 95% is the derivatives - which nobody knows the value of, though I think somene said their face value was 1000 trillion! Many times more than the total annual income of every nation's economy.

[UK populist]

2. About 20 times Global GDP ($60trillion)

The major of them are CDS's which they reckon the liabilities on them is about $55 trillion alone.
They are insurance against a given debt but because they have been totally unregulated they have become millions & millions of side bets which are at odds against each other. They have also been spread so far and wide that virtually every bank and investment house are linked so if a certain number of these big investors crash there will be a critical mass that will take the rest down with them.
This is the main reason why AIG was bailed out they were reported to have had $85 Billion worth of CDS's which happens to be the size of the bailout they received.

[Joe Chi Minh]

3. At 20 times Global GDP, I suppose we can hardly take comfort in its being a mere

$55 TRILLION and not 1000! Well, there are, it seems, Ponzi schemes and Ponzi schemes.

[Joe Chi Minh]

10. I think I may have been right about the $1000 trillion, as this article

suggests:

http://www.opednews.com/articles/IT-S-THE-DERIVATIVES-STUP-by-Ellen-Brown-080918-354.html

But who knows? Tens of trillions sounds plenty scary enough.

[Thor_MN]

9. The value of any asset is what people will pay to buy it

You can not find the true value of a asset without selling it. You can get an idea by comparing it to something similar that was recently sold. In the case of the derivatives and the derivatives of the derivatives, if no one will buy themtheir value is zero or less than zero. They could be so toxic that you have to pay someone to take responsibilty for them off you hands. The problem with the bailout is that the people holding the bag want to sell it to us taxpayers at a price relative to what they paid for it, not what it is worth now.

That's also why they want to suspend "Mark to Market" rules - so they can value these worthless pieces of paper at an imaginary amount they might be worth if the market recovers.

[BobTheSubgenius]

4. Daytrading????

They're not even trying any more, are they? That doesn't even rise to the level of "phoning it in."

[FREEWILL56]

8. I guess his answer is to have the lowlifes do it at night.

:silly:

[rayofreason]

5. What an idiotic statement.

The root of the crisis is the collapse of mortgage-backed securities because they were based on subprime mortgages that are defaulting at record levels. At the epicenter of the crisis are Fannie Mae and Freddie Mac, which defrauded investors, cooked the books, were who were run be people who had MILLIONS of reasons to push up subprime activity and snow the regulators.

[GETPLANING]

6. Trakas has a point

There is a strategy used by daytraders called "naked shorting" where they dump massive amounts of non-existent shares into the market. The combination of dilution and selling accelerates price declines way beyond anything seen before. Naked shorting is fraud, and is the same thing as counterfeiting. It should be prosecuted as such, but the SEC just winks and lets it happen.
There are also a new generation of Exchange Traded Funds (ETFs) that allow traders without margin accounts to get on the short selling bandwagon. One family of fund is called Proshares Ultrashort and leverages the short position two to one. QID, SDS, SKF, FXP, EFU are examples. Look them up.
Also Google Search "naked shorting".
The economic collapse is occurring for fundamental reasons. Traders are just giving things a big push so they can make money off it.

[Skink]

7. Day trading and long term trading follow the same strategy....

unless there is some form of Collusion involved.