Taurean
15th May 2012, 08:58
BLYTHE MASTERS, - DESTROYER OF WORLDS
The woman who built financial 'weapon of mass destruction'
The Exxon Valdez disaster, which occurred on March 24, 1989, played a major role in the collapse of the economy some 19 years later. See, as Stein documented, after lengthy litigation, Exxon managed to get the amount of punitive compensatory damages reduced from the hoped-for $5 billion to a paltry $500 million. But, back when Exxon had reason to imagine it might actually have to part with the $5 billion, the oil giant needed to find a way to cover its hindquarters. Exxon found a savior in the form of J.P. Morgan & Co., who extended the beleaguered company a line of credit in the amount of $4.8 billion.
Of course, that put J.P. Morgan on the hook for any potential judgment against Exxon. So the bank went looking for a way to mitigate that risk. Its solution made history, which you can read about in a June 2009 piece from the New Yorker's John Lancaster, entitled "Outsmarted." Here's the relevant portion:
In late 1994, Blythe Masters, a member of the J. P. Morgan swaps team, pitched the idea of selling the credit risk to the European Bank of Reconstruction and Development. So, if Exxon defaulted, the E.B.R.D. would be on the hook for it--and, in return for taking on the risk, would receive a fee from J. P. Morgan. Exxon would get its credit line, and J. P. Morgan would get to honor its client relationship but also to keep its credit lines intact for sexier activities. The deal was so new that it didn't even have a name: eventually, the one settled on was "credit-default swap."
http://www.jovanovic.com/DATA/blythemasters3D.jpg
With other mathematicians of the JP Morgan Bank, the English Blythe Masters has developed a magic formula that transformed the paper into gold and that made the bankers completely crazy.
Undisclosed, Blythe Masters is yet, as the saying goes the Guardian of London " the woman who invented the financial weapons of mass destruction ". According to Newsweek , these weapons have " unleashed a monster "that is still destroying the world economy, until the inevitable universal bankruptcy.
Indeed, banks are still hiding a large part of the 55,000 billion of toxic loans they will never see their balance sheets.
Pierre Jovanovic traces in this book how the extraordinary destiny of this young graduate of Cambridge has unwittingly crossed with hundreds of millions of people made redundant by the effects of the crisis, simply because all the bankers of the world have listened , fascinated, his gospel of credit default swaps at the point they ended up copying and abuse its formula "magic". Formula that takes them, even now, with their loss.
An incredible and relentless investigation that reveals how arrogant and stupid bankers have transferred losses from their irresponsible actions on the portfolio of each taxpayer (including yours) . 272 pages, € 19.9.
hvCvPBN6d94
The woman who built financial 'weapon of mass destruction'
The Exxon Valdez disaster, which occurred on March 24, 1989, played a major role in the collapse of the economy some 19 years later. See, as Stein documented, after lengthy litigation, Exxon managed to get the amount of punitive compensatory damages reduced from the hoped-for $5 billion to a paltry $500 million. But, back when Exxon had reason to imagine it might actually have to part with the $5 billion, the oil giant needed to find a way to cover its hindquarters. Exxon found a savior in the form of J.P. Morgan & Co., who extended the beleaguered company a line of credit in the amount of $4.8 billion.
Of course, that put J.P. Morgan on the hook for any potential judgment against Exxon. So the bank went looking for a way to mitigate that risk. Its solution made history, which you can read about in a June 2009 piece from the New Yorker's John Lancaster, entitled "Outsmarted." Here's the relevant portion:
In late 1994, Blythe Masters, a member of the J. P. Morgan swaps team, pitched the idea of selling the credit risk to the European Bank of Reconstruction and Development. So, if Exxon defaulted, the E.B.R.D. would be on the hook for it--and, in return for taking on the risk, would receive a fee from J. P. Morgan. Exxon would get its credit line, and J. P. Morgan would get to honor its client relationship but also to keep its credit lines intact for sexier activities. The deal was so new that it didn't even have a name: eventually, the one settled on was "credit-default swap."
http://www.jovanovic.com/DATA/blythemasters3D.jpg
With other mathematicians of the JP Morgan Bank, the English Blythe Masters has developed a magic formula that transformed the paper into gold and that made the bankers completely crazy.
Undisclosed, Blythe Masters is yet, as the saying goes the Guardian of London " the woman who invented the financial weapons of mass destruction ". According to Newsweek , these weapons have " unleashed a monster "that is still destroying the world economy, until the inevitable universal bankruptcy.
Indeed, banks are still hiding a large part of the 55,000 billion of toxic loans they will never see their balance sheets.
Pierre Jovanovic traces in this book how the extraordinary destiny of this young graduate of Cambridge has unwittingly crossed with hundreds of millions of people made redundant by the effects of the crisis, simply because all the bankers of the world have listened , fascinated, his gospel of credit default swaps at the point they ended up copying and abuse its formula "magic". Formula that takes them, even now, with their loss.
An incredible and relentless investigation that reveals how arrogant and stupid bankers have transferred losses from their irresponsible actions on the portfolio of each taxpayer (including yours) . 272 pages, € 19.9.
hvCvPBN6d94