Brits, Obama Say "No" To Europe Banning Credit Default Derivatives

March 11, 2010 (LPAC)—More is behind the meeting of President Obama, Greek Prime Minister Papandreou, and financial derivatives. After a March 9 meeting with Obama at which Papandreou claimed "a positive response" to Europeans' demands to ban speculators' credit default derivatives (CDS) on government debt, Obama said nothing, then appeared to snub Papandreou at a reception later yesterday evening. CDS are notorious from the AIG bail-out disaster. They are among the most toxic of the vast quadrillion-dollar mountain of financial derivatives contracts that helped put the world economy into its crash, all of which need to be wiped out under a "global Glass-Steagall" reorganization as proposed by Lyndon LaRouche.

Now the Financial Times Deutschland (FTD) has been told that four European heads of government — Papandreou, German Chancellor Merkel, French President Sarkozy, and Luxemburg Prime Minister Juncker — have already written the head of the European Union demanding an investigation of CDS-selling financial firms and a Europe-wide ban on the CDS.

But Her Majesty's Britain is opposed, says the FTD. Behind it, the Rothschild Inter-Alpha Group banks are opposed. And so, the Wall Street Journal reports today that the Obama Administration is opposed. The Journal got zero response to the Europeans' proposed action from the SEC, Treasury, or Federal Reserve; but it was told, by an unnamed "administration official," that the White House's so-called financial regulatory reform was sufficient on Papandreou's subject. That "reform," and the Rep. Barney Frank bill that passed the House, merely call for some derivatives to be reported through a clearinghouse, with plenty of exceptions and loopholes.

The European heads of government letter to EU President Manuel Barroso, reportedly speaks of banning those CDS which are bought and sold as "bets" on the default of bonds, by speculative firms which have no interest in the underlying bonds themselves. These are being called speculative or "naked" CDS. But they are roughly 90% of all $40 trillion of CDS, according to expert authorities on these markets. The whole huge, rotten shebang is basically debt speculating on debt, and investing in nothing.

The FTD reports the British reaction to the urgently needed ban on CDS was "step on the brakes! The British Financial Services Agency warned against hasty steps against naked CDS sales." FSA chief Lord Adair Turner of the fascist Bank for International Settlements insisted "CDS sales are 'not the main cause'" of the sovereign debt crisis, so let them be.

THE TRIPLE CURVE.

The Battle for a Science of Economy

By Michael Kirsch  December 24, 2009

http://www.larouchepac.com/node/13834