Short Quiz With Nov. 22 E-Mail

[johnkarls]

.
Short Quiz - "It's the Economy, Stupid" (Bill Clinton's favorite reminder) - Sent With The Weekly E-Mail on Nov. 22

1. What is a derivative???

2. Which derivatives have been run the same way a bookie runs a balanced book???

3. What derivative has been run as insurance (rather than as a balanced book)???

4. Since “credit default swaps” were nothing but insurance, why weren’t they regulated by the insurance regulators???

5. What happens when a bookie (or a financial institution) running a balanced book goes bankrupt for entirely-unrelated reasons, such as by spending too much on booze or whores???

6. What happens when an insurance company forms a separate subsidiary to write solely insurance covering a single risk – whether it be earthquake insurance for solely homes atop the San Andreas fault (rather than also insuring some homes in the Mississippi flood plain to balance risk), or for investors in pools of high-risk (sub-prime) mortgages???

7. Who were the perpetrators behind the mortgage crisis??? What are they doing today???

8. What are the important features of bankruptcy???

9. Is there a reason for not letting financial institutions running multiple-Trillion (yes, that is a “T”) balanced books of currency and interest-rate swaps go through the bankruptcy process???

10. Is there a reason for not letting AIG running a multiple-Trillion (yes, that is again a “T”) UNBALANCED BOOK of insurance on high-risk (sub-prime) mortgage-backed securities ("mortgage-backed securities" is a fancy name for investments in a pool of mortgages which, in this case, were high risk or sub prime) go through the bankruptcy process???

11. Is there a reason for not letting the Big-Three American auto makers go through the bankruptcy process???

12. What is the difference for economists between monetary and fiscal policy???

13. Is it possible for monetary-policy to employ negative interest rates???

14. Why is it tragic that Barack Obama’s economic advisers seem to be focusing on a fiscal policy featuring building/repairing roads and bridges???