Michael moore what is a derivative

Located miles from the strip, Sin and Tonic Casino relies on clever ideas from their owner, Dale, to increase profits. Dale decided to lower the payouts on all of his table games and slot machines and also increase the price of alcoholic beverages.

But, because his customers were not required to pay right away, no one seemed to complain. Soon, the Sin-a-Bonds were being traded on security markets nationwide.

Investors across the country, and soon across the entire world, never knew the AAA-rated Sin-a-Bonds were, in reality, the debts of homeless gambling addicts. Sin-a-bonds dropped to near-worthless levels and investors lost their money. Plus, the bank that issued the Sin-a-Bonds saw its capital depleted and they were consequently unable to offer any more loans. The bank laid off all of their employees and closed. Dale was unable to pay any of his bills and all the companies that granted him payment extensions had to take massive loses, as Dale was their largest customer.

The brokerage firms that sold the Sin-a-Bonds were in heavy distress. Eventually, the government stepped in to save them by creating a bailout package that was funded by tax payers from states where gambling is prohibited.

Dale retired from the casino business and is now rumored to be heavily involved in politics. You must be logged in to post a comment. Hedge Fund Adviser Found Liable for Swoon begone! Hedge funds return to winning Current state of SMA environment within hedge All my best, Thomas J. The strange thing is, there's not much in it to offend his usual critics. It comes at a time when the U.

S, economy essentially serves him as a footnote. His study of the meltdown leads him to the puzzling matter of "derivatives," the mysterious financial instruments involved in the bank collapses.

In the film, Moore asks three "experts" to explain a derivative to him. They can't. You're not supposed to understand it. It's like a snipe hunt on Wall Street. I talked to a guy who used to sit on one of the nine Federal Reserve Boards. They brought somebody in to explain these credit default loans and everyone sat around the table going, ah hum, ah hum. He told me he didn't have a clue what the guy was saying but was afraid to look stupid. He got the sense that nobody in the room understood it.

But a weird thing happens amongst smart people. They won't admit it. He wants to go to the virtual casino, where you never really actually touch any of the money. He wants to place bets with money that isn't his and he starts to win some of it and he starts to think it's his money.

He starts to get a little nervous about all this betting because he never really actually sees any money. So he says, You know, I need to take out an insurance policy just in case this isn't real.

So these derivatives are essentially bets on bets. They've been betting against the economy. If the economy gets worse, jobs are gonna have to be cut. That should help Wall Street, because as unemployment goes up the Dow Jones goes up. Wall Street likes it when you get rid of people because it's good for the bottom line.

Employees are your number one expense. Let's say they've taken people in your neighborhood and taken 10 percent of each of their mortgages, put them into a brand new document and sold it to somebody. That's why they can't find your mortgage. Moore is rolling now. It's an inspiration to see him under a head of steam, his red baseball cap bobbing and his hands waving.

They really pushed that after the crash -- that these low income people and their subprime mortgages did this to us. It had a racial overtone in it and was really a little creepy.