The big issues behind the bailout.

"whats options got to do with understanding risk and reward in macroeconomics. . Rogers was quoting a SEC study btw. the academia is full of conflicting opinions. practitioners like rogers have a better understanding of real life. " Rogers said “I dont buy OPTIONS because 90% of them expire worthless, so I only write options” This is quoting from SEC for you eh. You replace OPTIONS in that sentence with any other asset class and it wont make any sense, it doesnt matter if 90% or 99% of them dont make any money, what is relevant is how much money you can make with the other 10% or 1% of the options. This statement shows a poor understanding of return expectations in general, not only about the properties of options. I made this point earlier but you dont get it do you? “bernanke is from the same school as easy Al g’span. he is of the helicopter drop speech fame. he did exactly the same things g’span did.there is nothing he did to reverse g’span’s follies and for that he is culpable” Bernake became Fed chairman in 2006 after a lot of these dubious loans have been given by the banks. The banks had toxic assets in their balance sheet before he became the Fed chairman so what do you suggest he should have done? or are you going by the logic Greenspan School=Ben School Greenspan screwed up Therefore Ben screwed up or are you saying Bernanke= Ivy Leaguer Ivy Leaguers screw up (like LTCM) so Bernanke screwed up I am not defending Bernanke, I am just trying to understand why Jim Rogers is so much more qualified than Bernanke to deal with the crisis. "the nobel prize winners and their quants had a great idea of risk -didnt they?.or were they just unlucky ? " How did this come into the argument. I never said anything about nobel prize winners and the success of their models. Why are you attributing statements to me, which I never made?

batterinram Wrote: ------------------------------------------------------- > "whats options got to do with understanding risk > and reward in macroeconomics. > . Rogers was quoting a SEC study btw. the academia > is full of conflicting opinions. > practitioners like rogers have a better > understanding of real life. " > > Rogers said > > “I dont buy OPTIONS because 90% of them expire > worthless, so I only write options” > > This is quoting from SEC for you eh. You replace > OPTIONS in that sentence with any other asset > class and it wont make any sense, it doesnt matter > if 90% or 99% of them dont make any money, what is > relevant is how much money you can make with the > other 10% or 1% of the options. This statement > shows a poor understanding of return expectations > in general, not only about the properties of > options. I made this point earlier but you dont > get it do you? > > “bernanke is from the same school as easy Al > g’span. he is of the helicopter drop speech fame. > he did exactly the same things g’span did.there is > nothing he did to reverse g’span’s follies and for > that he is culpable” > > Bernake became Fed chairman in 2006 after a lot of > these dubious loans have been given by the banks. > The banks had toxic assets in their balance sheet > before he became the Fed chairman so what do you > suggest he should have done? or are you going by > the logic > > Greenspan School=Ben School > Greenspan screwed up > Therefore Ben screwed up > > or are you saying > > Bernanke= Ivy Leaguer > Ivy Leaguers screw up (like LTCM) > so Bernanke screwed up > > I am not defending Bernanke, I am just trying to > understand why Jim Rogers is so much more > qualified than Bernanke to deal with the crisis. > > > > "the nobel prize winners and their quants had a > great idea of risk -didnt they?.or were they just > unlucky ? " > > How did this come into the argument. I never said > anything about nobel prize winners and the success > of their models. Why are you attributing > statements to me, which I never made? Uh, I think Rogers probably does understand options. I think he is saying he doesn’t like the concept of buying something that will often expire worthless (i.e. it’s not his style). Sort of in the same way that Buffett calls derivatives “WMD,” even though I am sure he understands their risk sharing attributes. I also know one CIO that justifies running his winners on the grounds that it is like free working capital. I think he understands that it is not free working capital.

“Uh, I think Rogers probably does understand options. I think he is saying he doesn’t like the concept of buying something that will often expire worthless (i.e. it’s not his style).” I am not so sure about that he says he likes to write them but not buy them. “Sort of in the same way that Buffett calls derivatives “WMD,” even though I am sure he understands their risk sharing attributes.” This is understandable. Many traders have gone out of business by writing naked options. Also because of the CDS contracts AIG had written, a lot of firms might have gone out of business if AIG had failed. I can see now why Buffet described derivatives as “WMD”

I’d rather have no understanding of options and risk and make Jim Rogers kind of money than be a great academic.

“I’d rather have no understanding of options and risk and make Jim Rogers kind of money than be a great academic.” Agreed. I would like make the kind of money he made, who wouldn’t. However I just dont think he is the guy to get us out of this mess we are in

so why are Bernanke and Paulson the right people. please make your case for them?. what gives you so much confidence in them. their stellar track record?. their brilliant prescience? what exactly? in case they arent the right ones -who is ,in your opinion,the best candidate

Jim Rogers understands options as well as anyone. This is like saying A-Rod doesn’t play slow pitch softball very well. He may not play it much, but he would be a serious asset to any company team.

Dsylexic Wrote: ------------------------------------------------------- > so why are Bernanke and Paulson the right people. > please make your case for them?. what gives you so > much confidence in them. their stellar track > record?. their brilliant prescience? what > exactly? > in case they arent the right ones -who is ,in > your opinion,the best candidate Those guys are probably as good or better than anyone else and they happen to be in the hot seat right now. IMHO, no two people should have extraordinary power in this situation and we should let markets and democratic institutions handle it. So instead of Bernanke and Paulson, I nominate Capital Markets and American Constitutional Process.

the US constitution would say No Govt Role if I understand it correctly.

"so why are Bernanke and Paulson the right people. please make your case for them?. what gives you so much confidence in them. their stellar track record?. their brilliant prescience? what exactly? where did I say Bernanke is the right person for the job and I didnt even mention about Paulson. I just said that Rogers is not the right guy and Bernanke is not responsible for the mess. You are just not interpreting my posts correctly. “in case they arent the right ones -who is ,in your opinion,the best candidate” I will leave the job of picking the next Fed chief to you. My vote goes to Sarah Palin):

“Jim Rogers understands options as well as anyone. This is like saying A-Rod doesn’t play slow pitch softball very well. He may not play it much, but he would be a serious asset to any company team.” I am not saying he doesnt understand options because he doesnt buy them. He implied writing options is more profitable than buying options, because 90% of the options expire worthless, this is does not make any sense.

batterinram Wrote: " > > I will leave the job of picking the next Fed chief > to you. My vote goes to Sarah Palin): i vote batterinram

Paulson is a closet democrat and traitor to the country His group has ties to acorn

Well Bernanke has studied economic history pretty well, and even if he may be new to the political process, I do feel somewhat better because an understanding of history is probably pretty important at this particular moment. Not so sure about Paulson.

what about the dangers of learning the wrong things from history. marx too studied history -didnt he?. its the perspective you learn history from ,that shapes your opinions

Well, there’s a risk of learning the wrong lessons from history, vs. the risk of learning NO lesson from history. The former gives a better expected return, because it would be difficult to learn no correct lesson from extensive historical knowledge, whereas it’s easier to have almost no correct information by not knowing history. Incidentally, there’s no indication that Marx learned only wrong things from history. His criticism of capitalism is still remarkably apt for a theory that is about 150 years old. Just because he couldn’t come up with a solution to a difficult problem doesn’t mean his analysis of the problem is useless.