The “alphabet” derivatives-cds’s, mbs’s, etc.-were theoretically designed to spread credit risks among parties who were best able to bear that risk. In reality they brought about a financial crisis that may alter world power for decades. They have put the largest banks into actual, although disguised, insolvency (undeclared bankruptcy), have gutted American industry of capital, and incidentally put millions of Americans into poverty. What are these things and where do they come from?

“Derivatives” Defined

A “derivative” security is a legal right that is derived from some other right. Perhaps the most basic or familiar derivative is a stock “option.” Options come in two forms, “calls” and “puts.” A call is the right (but not the obligation) to buy something at a given price at some time in the future. A put is the right (but not the obligation) to sell someone else something at a given price at some time in the future. A simple example would be a stock call or put. If you think IBM stock is going to gain value, you can buy a call option. As the stock price goes up, so does the value of the call option. If the price of the stock goes down, so does the value of the call option. But options are much less expensive in general than the underlying stocks. It might cost you $200 to buy the right to buy 100 shares of IBM at $120 a month from now, whereas the cost of the stock itself would be $11,000 (assuming a price of $110 per share of IBM stock). So you can control more stock with less money through options.

Controlling more stock with less money is financial “leverage. It’s like using a megaphone: a small change in the stock price creates a large profit for the owner of the option. Under the right circumstances, a little money can turn into a lot of money in a short time with options.

Stock call and put options make a lot of sense. If you own the stock and want to insure against the possibility of it going down in value, you can buy a put option. At the end of the day, for a cost of a few dollars per share you can protect against a sudden wipe-out of an account’s value. If you happen to be managing someone else’s money this makes a lot of sense for everybody. On the other side of that equation, someone sells a put, signifying a willingness to purchase the stock if it goes down to a given price. For IBM, to continue the example, this might also make excellent sense. Buying and selling calls allows parties to divide up the future potential of a rising stock so that they can adjust their risks in a rational way.

Alphabet Derivatives-Some Background

The alphabet derivatives were clothed with the same rationality as stock derivatives and posed as a means to allow financial interests to split up the costs of financing the housing boom that developed in the late 1990s and early 2000s.

Let us start with the way houses have been traditionally purchased. Mr. Jones would find a house he liked and negotiate a price with Mr. Smith, the seller. After arriving at a price, Mr. Jones would then seek financing from a savings and loan or bank. The bank would have the house appraised and offer to lend Mr. Jones some of the price. Mr. Jones would, in the old days, have had to come up with 10 or 20% of the purchase price and would borrow the rest. The bank would have taken actions to protect itself-it required Mr. Jones to come up with a certain amount of money (establishing some “equity” in case of foreclosure and incidentally proving his creditworthiness), and it examined the appraisal to make sure the house was actually worth the money spent (so that if it had to foreclose it could get its money back by selling the house).

That kind of careful banking protected the purchaser, the bank, and the general market. But it did make it hard for people with less money, who couldn’t afford the large down-payment, to purchase a house. Of course the banks could not have cared less about that, but politicians did-they saw it as a means to improve the lives of their constituents. What the banks did care about, though, was making more money. For various reasons, the interest rates on money were being held down in the late 1990s (through the present), and it began to be difficult for banks to make the kind of money they wanted simply by lending money in the traditional way. They needed leverage.

The “Rest” of the Story

The reason interest rates were so low was that the government was holding them down. At the same time, the federal government was also creating vast new amounts of dollars to fund huge government deficits and trade imbalances. This was causing “fixed assets” like houses to “inflate” in price, and thus was born the housing bubble. Over a lengthy period of time houses steadily went up in value 5% or more per year.

A mortgage loan, which enables a purchaser to buy a whole house for a fraction of its cost down is a form of leverage. If you make a $5,000 down-payment on a $100,000 house, and the house gains 5% in value in a year to $105,000, you have doubled your equity. Your house is worth $105,000, but you only owe $95,000 (without even having made a payment). If it goes up another 5% the following year, your house is worth a little over $110,000, but you still owe only $95,000 (still without even having made a payment).

Since houses “always” went up from year to year, banks found themselves needing less and less of a down-payment to protect themselves against foreclosure. Refinancing became popular as a way for the house-owners to remove some of the equity of their houses to let them buy things they otherwise could not afford.

And all the financing activity associated with houses meant that banks needed a faster way to make loans and get their money back. And thus were born the alphabet derivatives.

First came the mbses-mortgage backed securities. Mortgage backed securities are basically bonds: they are a right for the owner to receive payments over time (the mortgage payments at the interest rate charged by the banks), and if an individual house owner could not make payments, the bond was protected by being able to foreclose on the house. Since the government was giving banks money at 1% interest, and the banks were charging 5 or more percent interest to the house buyers, the banks made a lot of money on the mortgages. The mbs’s allowed the bank to turn around and sell those mortgages to somebody else, get their money back out of the deal and lend it again. And again. The banks made a lot of money on this scheme, and because of the nature of the monetary system (“fractional reserve”), they were super-leveraged.

The question became, how to find large enough sources of money to keep funding the mbs’s. In a way, that was easy. The best source of money for any hare-brained scheme is retirement funds, also known as everybody’s “pigeon.” Retirement funds have a lot of money, the beneficiaries are vulnerable, and the money managers seem to be remarkably careless. But many investment funds were required by law to invest only in particularly safe funds. They could buy bonds, but only tripleA-rated bonds.

Not every house buyer is triple-A-rated. And during the latter stages of the housing bubble, as politicians wanted more home-owners, banks wanted to sell more houses, and the funding for the houses shifted from careful local bankers to careless retirement administrations, the quality of the risk of the mortgages slipped, to say the least. Those were the days of “liar loans,” where nobody checked even to see if the loan applications contained true information, much less made any real evaluation of the purchaser’s creditworthiness.

So how to make sure the pigeons could end up with the mbs’s? That’s where credit default swaps (“cds’s”) were born. A credit default swap, as it was developed, is simply a form of money-laundering. A large entity (primarily AIG) insures, or guarantees the loans making up a mortgage backed security. In theory, in other words, any time a home-owner was going to miss a payment, AIG would be right there to make up the difference. Because AIG had an triple-A rating, the mbs’s it guaranteed simply took that rating, too. That allowed the bankers to shift vast quantities of the mbs-related risk onto the shoulders of their pigeons, the old and infirm. No one really checked to see how many cds’s AIG was issuing…

Next time you hear about the elderly struggling to make ends meet, consider how the bankers bilked them of hundreds of billions of dollars. The bail-outs protected the banks from any consequences of their actions and further enriched them.

Draw your own conclusions.

You can get a lot of help, much of it free, from my website at: http://yourlegallegup.com. Or please take a look at a brief video presentation: http://www.youtube.com/watch?v=zT60kiHn8G8

Kenneth H. Gibert.

I Received a J.D. from Washington University Law School in 1989 and practiced law in St. Louis city and county (federal, state and local courts) for almost fifteen years, the last several of which were focused almost exclusively on debt litigation.

I founded my websites in response to this opportunity. My mission is to protect ordinary people from being taken advantage of by the debt collectors.

Author: Kenneth Gibert
Article Source: EzineArticles.com

The recipients of the massive bail-outs and buy-outs administered by the USA government have all been in the same sector of the USA economy: the financial sector. Why is the financial sector the privileged sector? The answer is simple and yet staggering. In a word, it is derivatives. Warren Buffet described derivatives as, “Weapons of Economic Destruction”, and in the following paragraphs, I’ll discuss briefly what a derivative is and then place most of the attention on why they have become the “weapons of economic destruction”.
    
What is a derivative? Per Wikipedia, derivatives are “financial contracts, whose values are derived from the value of something else. The underlying value on which a derivative is based can be an asset (e.g., commodities, stocks, residential mortgages, commercial real estate, loans, bonds), a stock index, weather conditions, or other items. A derivative enables investors to take rather large positions (a.k.a. a gamble) in a given market for a relatively small amount of capital, and with such leverage comes substantial profit, if the gamble is correct, or loss, if the gamble is wrong. With a derivative, one investor wins and one investor loses.
    
Why are derivatives “weapons of economic destruction”? The answer has two reasons, the first being their lack of transparency. Those who invest through derivatives are not required to disclose information regarding counterparties to the regulators. With this shroud of anonymity around the derivatives market, investors, government agencies, and private agencies can not ascertain the risk assumed by individual companies, banks, or the entire financial system.
   
The second reason why derivatives are so dangerous is their massive market size. The typical volatility which affects this market ranges from 2% to 5%, so on any given day, the losses from this one quadrillion USD market can approximate US$37 trillion dollars! The total market value of all equities on the planet is about US$31 trillion, so derivatives have the power to destroy all of the known world’s equities in a single day. 
    
Now that we understand the magnitude and destructive power of the derivatives market, we can likewise understand the reason why the financial sector of the USA has received, in bail-out money from the USA government, more money in terms of GDP than was given to pay for World War 1, the Korean War, the Vietnam War, the Gulf War, and Operation Iraqi Freedom COMBINED. The financial sector has become, as they say, “too big to fail”, and thus the reason why the financial sector has received trillions of dollars worth of US tax payer funded bail-out money.

Brett Bowers
brett@redrocklearning.com
http://www.infousher.com

Author: Brett Bowers
Article Source: EzineArticles.com

A very important topic for any manager or entrepreneur to know is Source-Derivation. Understanding Source Derivation is to the Entrepreneur as understanding the laws of physics is to an engineer. If you go into business without it, good luck.
Source Derivation is this: The entire operations of a business is derived from the product(s) or service(s) it sells which is derived from customer needs. Every single function of a business has some relation, direct or indirect, to either the product and/or customer. In a vague sense, departments such as marketing, finances, operations, human resources, and their internal elements have some relation to either the product and/or customer. Thus, the nature and operation of these elements must complement the nature of their sources.

Further, and more specifically, the intrinsic nature and specificity of these departments will be determined by the specificity found within the consumers’ needs and the product or service. For example, the marketing message of a software firm will include details directly related to the unique software being marketed and its relation to the unique consumers of this product.

To help you better understand this source-derivation concept, let me give a parallel: Religion. Virtually all ancient religions, excluding Christianity, were created to explain reality; reality is the source, religion the derivation. One can know that theology will contain particular thoughts simply because there must be a explanation for each major element of reality. For example, Greek mythology teaches that man became man (different than animals) because Prometheus, a god, chose to steal various powers from the gods and give them to man. They also teach that Kronos is the god of time, Uramos the god of the sky, etc. Every major aspect of reality is explained by these gods. Thus, if a student understands reality (the universe, earth, sky, man, etc), he or she can infer virtually the entire theme and direction of Greek Theology without having any prior learning.

In the same way, all operations of a business are derived from a need just as each aspect of religion is derived from a corresponding aspect of reality; since a company creates a product/service to fill this need, everything about a business revolves either around the customer or product. One may know the derivations which may be created by simply extrapolating rationally and creatively from the sources. For example, if some product is small in size, durable in nature, and appeals to a basic need of a specific target audience dispersed over a large territory, there is a good chance that it will be marketed directly utilizing direct marketing selling principles.

In extrapolating rationally, one may also know what elements of business simply must exist–and it is in this principle that we discover invaluable application. For example, a business with an uncommon and complex product requires extensive communication with consumers; this is absolutely vital and there must be no compromise whatsoever. You can only understand the vitality of communication, and thus, effectively carry out communication on a consistent basis if you understand the source–the complex product–and realize the simple fact that it must be explained.

This is very important for an entrepreneur. Typically, an entrepreneur has already found a need and has already determined the product or service. What has not been determined is how the rest of the business functions will operate in order to create the product, secure customers, and keep customers; in essence, they haven’t determined the derivative of the primary need-source. Understanding the Source Derivative concept, combined with horizontal analysis, creates a rational and systematic procedure for determining the structure and operations of a business and an approach based upon sound principle and greater assurance of relative effectiveness (not necessarily feasibility).

This isn’t rocket science, yet many fail to define the customer needs and product and thus fail to create an optimal business. Why? Because too many begin by creating the derivative functions before understanding the product/service an how it relates to consumer needs. The equivalent of this in the real world is like an engineer who does poor engineering analysis before building a bridge, and a bridge with weak support will surely not be able to withstand time and may even fall apart in extreme weather. Amazingly, much the same way, businesses are often left to a little good business sense and the rest chance.

Why do so many businesspeople do this? Simple. Either they don’t have a proper understanding of business and/or they care more about something else (profits, a personal agenda, a certain function instead of the whole, etc) rather than the consumers’ needs; they are like the engineer who doesn’t understand the laws of physics or the one who cares more about ease or speed of construction instead of long-term stability. They try to get by without properly communicating an uncommon, complex product maybe just because it doesn’t jive with the bottom line. Little do they know that there will be no bottom line without such communication.

Interestingly, business textbooks nowadays do in fact teach the customer-centric approach, however, most of them seem to simply state the importance with only a vague reason or two why it is so. They do not stress the fact that every single operational element of a business is dependent upon the consumer and product of the firm and if there is an alteration in the sources, there should be an infusion of change throughout the derived business functions. They also don’t tell you how to create these business functions, in a rational and sound manner, with this relation in mind; and thus, they fall short where it matters because we know that ideas without practical application are useless.

In my next post, I will explain the leverage in operational strategy. That is, how one can look at a business’s consumer needs and the business’s product or service combined with horizontal analysis to create business functions that operate properly in respect to these sources. When all functions operate in such a manner, synergy is created and competitive advantage is often gained.

I will give a real life example of this operational strategy–which utilizes source-derivation–in my next post.

My name is Eliot Wasmund. I am a humble college student at the University of Wisconsin Whitewater majoring in Entrepreneurship where I’m VP of the Collegiate Entrepreneurs Organization. I’ve been fortunate enough to have quite a bit of entrepreneurial experience in my young years, and I definitely have some more to come in the future. I just so happen to love entrepreneurship; I guess I got that gene that they’re talking about or something like that, maybe the blood type–I don’t know.

For more information and great articles, go to [http://www.eliotwasmund.com] where I write on entrepreneurial topics for those who dare to think big. I look forward to seeing you!

Author: Elliot Wasmund
Article Source: EzineArticles.com

Derivatives have come under general scrutiny in recent times, owing to the use of hedging instruments by companies for financial mismanagement. The misuse of derivatives has put many companies in the legal line of fire. The popular notion that derivatives caused the downfall of companies like Enron, is however, not true. The derivatives by themselves are not damaging, their misuse can cause trouble for businesses.

What are Derivatives?
Derivatives are financial arrangements by which your company earns profits based on the functioning of an underlying asset.

If used properly, derivatives can shore up your company’s defense against many economic problems.

Advantages of Derivatives:
1) Flexibility:
Derivatives can be used with respect to commodity price, interest and exchange rates and equity price. They can be used in many ways.

2) Risk Reduction:
Derivatives can protect your business from huge losses. In fact, derivatives allow you to cut down on non-essential risks.

3) Stable Economy:
Derivatives have a stabilizing effect on the economy by reducing the number of businesses that go under due to volatile market forces.

Disadvantages of Derivatives:

If derivatives are misused, they can boomerang on the company.

1) Credit Risk:
While derivatives cut down on the risks caused by a fluctuating market, they increase credit risk. Even after minimizing the credit risk through collateral, you still face some risk from credit protection agencies.

2) Crimes:
Derivatives have a high potential for misuse. They have been the caused the downfall of many companies that used trade malpractices and fraud.

3) Interest Rates:
Wrong forecasts can result in losses amounting to millions of dollars for large companies; it can wipe out small businesses. You need to accurately forecast the long term and short term interest rates, something that many businesses cannot do.

Minimizing Risks with Derivatives:

So how do you minimize the above-mentioned risks with derivatives? Here are some suggestions.

1) Future Exchanges:
Arrange the derivatives through future exchanges. You may need to put in a lot of work here; you must keep track of all adjustments in the market worth of the underlying asset.

2) Asset and Liability driven Transactions:
The transactions should be driven by asset and liability management. You should not speculate based on future forecasts.

3) Derivative Policy:
A good derivative policy focuses more on cost management and less on forecasting. It should aim for cutting down expenses and costs.

While dabbling in derivatives is risky if you choose to speculate, derivatives can be an important tool for financial structuring and cost management if you use them correctly. If you do not know how to start investing in derivatives, you can consult a small business advisor or financial consultant. Remember, if you do go for derivatives, always play by the book and never try anything illegal.

Alexander Gordon is a writer for http://www.smallbusinessconsulting.com – The Small Business Consulting Community. Sign-up for the free success steps newsletter and get our booklet valued at $24.95 for free as a special bonus. The newsletter provides daily strategies on starting and significantly growing a business.

Business Owners all across the country are joining “The Community of Small Business Owners to receive and provide strategies, insight, tips, support and more on starting, managing, growing, and selling their businesses. As a member, you will have access to true Millionaire Business Owners who will provide strategies and tips from their real-life experiences.

Author: Alexander Gordon
Article Source: EzineArticles.com

Internet technology has brought about a revolution in the mindset of people from all categories of life, and is now set to take over the business and trading communities as well!

Just take a look at some of the ways in which Internet technology has brought about a change for the better (though some would not agree with me!)–

(a) Advertisements centered round cellphones claim to be connecting people around the world. And it is true! Landline phone services have been relegated to the past–it is Voice over Internet Protocol now (VoIP). You save on costs and save on time!

(b) What about shopping? This is the greatest boon offered by the World Web. Be it fitness gear, clothes, books, DVDs, MP3 digital player–anything, everything can be purchased online from the comfort of your own home. You pay online, and everything is shipped out to your residence.

(c) Postal services and courier services are no longer in as much demand as they used to be in the past. The electronic mail service or e-mail has taken over!

(d) Internet technology has intruded into your personal life too! There are web sites specially meant for fixing up dates. You can check out the person of your choice before actually meeting him/her. No more unnecessary expenditure on soft drinks or food, and no more heartaches!

(e) Cookbooks are no longer necessary to figure out the menu for any special occasion. Cooking web sites can provide you with delicious recipes–as many as you want.
(f) The biggest headache for you and me is payment of bills before the respective due dates! Automatic payments are possible online. They could be related to loans, utility bills, insurance bills or credit cards.

There are many, many more ways in which the Net has revolutionized the world, but it would be too exhausting to list them all out here! So a few examples should suffice to give you a general idea about technological advances.

The latest “victim” of Internet technology is the trading world! It has introduced trading software. Before going in for any sort of trading software, it is advisable to check out its features–

(a) There should be a facility to allow simultaneous opening of different windows. You can then compare various exchanges or markets online. You can even work on all of the windows at the same time.

(b) It should facilitate the examination of various kinds of data. You should be able to compare these items at one go.

(c) There should be automatic evaluation of well-known market indicators. These are Fibonacci series, moving average and stochastic. The indicators should be so designed that they can be easily switched from one to another. For instance, going from a 5-day stochastic to a 9-day stochastic.

(d) Lastly, you should be able to track your profits and losses via regular updates on closing prices in the market.

Now, why has Internet technology come up with trading software and why would you need it?

Whether you are a broker or a shareholder, you are concerned with assets and securities–you trade them. You are also interested in how much you might have gained in the way of profits, or what are the losses you have incurred with unwise investments. All this is difficult to do manually, hence the entrance of trading software.

This sort of software is meant to be an electronic advisor for decision-making related to trading activities. Analysis of market trends is possible, enabling you to select the company/institution you would like to place your money on. A word of caution–all trading softwares do not necessarily function in the same way; so go for the best one that fits in with your needs.

But despite all the precautions you take, you are always at risk because prices never remain steady. And that is why the trading world was the domain of only elite businessmen in yesteryears. They knew how to play the game and how to benefit from it! Today, the whole picture has changed, thanks to Internet technology!

Old or young, newcomer or professional–all are welcome to try their luck! Sometimes, it may take just under an hour to win a huge sum or lose a large amount! Use the trading software so generously given by Internet technology to make wise decisions. You will only stand to benefit with a cautious approach!

Abhishek has an uncanny insight into Trading! Visit his website http://www.Trading-Masters.com and download his FREE Trading Report and learn some amazing Trading tips and tricks for FREE. His tips would save you thousands and make you better at Trading! But hurry, only limited Free copies available! http://www.Trading-Masters.com

Author: Abhishek Agarwal
Article Source: EzineArticles.com

The first section of the Import DXF File dialog, Derive Objects From, offers three choices:

*Layer: Each layer with a unique name is converted into a separate object.

*Color: All entities of the same color are converted into a single entity.

*Entity: Each entity is converted into a separate object.

The Weld vertices control how coincident vertices in the DXF file are welded into single vertices in the 3D Studio MAX mesh. They are:

*Weld Threshold: Determines the size of the area that vertices must occupy to be welded.

*Weld: Turns on the Weld Vertices function. Auto-Smooth applies smoothing groups to the geometry based on the smoothing angle set by the Smooth Angle spinner. Edges between faces that have an angle between them that is greater than the specified smoothing angle appear faceted in the rendered image. Edges between faces that are below the specified angle are smoothed. To activate Auto-Smooth, use:

* Smooth Angle: Sets the angle at which smoothing occurs.

* Smooth: Turns the smoothing on. In the Arc Subdivision section, you can make two settings:

* Polygon Degrees: Specifies the number of degrees between each vertex of any imported curvature that’s converted to a mesh object in 3D Studio MAX. An example might be an extruded spline.

* Spline Degrees: Specifies the number of degrees between vertices in an imported curvature that’s converted to a Bzier spline (a shape) in 3D Studio MAX. This could be an arc or a non-extruded spline, for example. Unlike Mesh objects, Bzier splines contain their own curvatures, so you do not need as many vertices. The default setting of 90 degrees is usually adequate. The final section of the Import DXF File dialog offers three checkboxes:

* Remove Double Faces: Removes one of the pair wherever two faces are occupying the same location.

* Fill Polylines: Converts closed 2D polylines into mesh objects. Closed, planar, 3D polylines are capped. If the 2D polyline is open, it is imported as a spline shape.

* Unify Normals: Forces the normals of all faces on each object to face the same way (usually out).

Daniel has been writing articles for quite a long time. Come visit his latest website over at http://filestorage-cabinets.com which helps people find the best File Storage Cabinets and information they are looking for.

Author: Daniel Kreimer
Article Source: EzineArticles.com

No problem!

If you now have a good understanding of what is Public Domain, it’s time to start and learn how your newly researched product can be turned into something that is highly profitable. Perhaps a blockbuster.

What I suggest is that you pick on a subject that you are reasonably familiar with. You don’t have to do this but it certainly helps when you come to promote the product, as your passion on the subject will be clearly seen.

So, you have the raw material in front of you – a Public Domain product. You can, of course, merely re-produce what you have. But wait a minute. That’s not very original is it?

Create your own product.

What does that mean?

It means that if you are certain (which you now are) that you have in your possession a Public Domain work, then you can “play” around with it to your heart’s content.

You possess an original version of a work, you can now create a “derivative” of that original work by adding some of your own personality.

You can cut a bit out here and insert a bit here. You can add your own graphics, you can delete what bits are out of date (as some of them may be) or you can completely re-write it if it doesn’t sound right to you. One of the things I usually always do is add my own Foreword. Go ahead, make as many changes as you think fit.

Here are some ideas that you can do with your Public Domain product:

Idea #1. Chop it up and make it into a course, either online (digital) or offline (printed version). A ten part course will outperform a one part manual.

Idea #2. Add a Foreword and change a few paragraphs around and you could publish it as an Ebook. Or alternatively, make it into a physical book with ISBN number and market it through bookstores or Amazon.

By making (substantial) changes you can then add your own copyright
to the new product and even put your own name in there as the author, or that of a pseudonym. Something like: (c) ABC Publishing.

Idea #3. Get a professional voice and turn your product into an audio version. This would work well especially for children’s books.

Or you could make a product that is both audio and a printed version.

Idea #4. Turn your research into a video or DVD product. If it’s a “how-to” type of product this could sell like hot-cakes.

Idea #5. Turn your product into a newsletter and charge for it. Either as a printed version or use a members-only area of your website.

Idea #6. Make your product into a series of teleclasses. Get someone to interview you, organize a bridge line for 1500 people. You can charge for this or make it free as a forerunner to a bigger and better product.

Record the call and make this into a product.

Idea #7. Make a CD-ROM. Exploit the present day buzz of having a product that uses multi-media. Make something that is inter-active.

Idea #8. Find a series of books by a well-known author (of the day) and re-publish these as a monthly book club. Or pick on a topic and re-publish works from various authors.

Idead #9. What I like to do is find more than one item in that particular field. Then, instead of making a product with just one work, make a “package” using two, three or more items. Maybe not just books or ebooks, but a mixture of the written word with audio and/or video. The more originality, the better.

The sky is the limit.

With Public Domain you have at your disposal thousands and thousands of ideas and products. Take any one, do some serious thinking of how you could present it differently. The best ideas are usually slants on someone else’s original idea.

It could be you that makes that next outrageous product.

Public Domain material is there for the taking. Do it before someone else does!

“Interested in knowing more about creating your own digital portfolio? You can get access to a 52 week training program that explains, step-by-step, and with the help of screenshots, exactly how to research, create, and market your own products. Go to: http://www.MillionDollarPublisher.com to find out more.”

Author: Peter Woodhead
Article Source: EzineArticles.com

There are many second rate, and third rate online article directory websites out there. These websites cater to article marketers that need to drive traffic to their online businesses. These second and third tier directory sites are being overrun by articles created not by humans but by derivative software programs that spin existing content, as they make one article into 10 or ten articles into 100. Now, these directory sites don’t seem to care about these spam articles. But the top tier and first rate directory websites sure do.

Why you ask? Well, they need to maintain their reputations, and they also need make money, and yes, they’ll lose their unbelievable Google Rankings if they do not watch the “spammy” PLR and Derivative crap, because truly that is the easiest way to get de-listed on a major search engine. Also, consider that if the reader gets miffed after reading these less than acceptable computer generated articles, they will not click on anything from that particular article directory site again.

So, you can begin to see why it does matter to the top tier websites and why it doesn’t so much seem to bother the second and third string players in the industry. For those sites that care about their reputation, it does matter what the reader thinks, just like if the NYTs website started publishing crap, no one would go there for the news so no one would read the ads and no one would thus, advertise.

This is why the best online directory article sites have a good win/win situation going, and the Legitimate Authors (real humans) would like to keep it that way, otherwise all is lost and we’ve put in a lot of work to get here, all of us have. Therefore, if you were to ask me; “Can Online Article Directory Websites Slide With Derivative Software Articles Forever?” I’d say no, those who go down that path will drive their companies off a cliff. Please consider this.

Lance Winslow is a retired Founder of a Nationwide Franchise Chain, and now runs the Online Think Tank. Lance Winslow believes in quality; http://www.bloggingcontent.net

Note: All of Lance Winslow’s articles are written by him, not by Automated Software, any Computer Program, or Artificially Intelligent Software. None of his articles are outsourced, PLR Content or written by ghost writers. Lance Winslow believes those who use these strategies lack integrity and mislead the reader. Indeed, those who use such cheating tools, crutches, and tricks of the trade may even be breaking the law by misleading the consumer and misrepresenting themselves in online marketing, which he finds completely unacceptable.

Author: Lance Winslow
Article Source: EzineArticles.com

Most folks who post articles at online article directories in order to do Internet marketing like to see their articles prominently displayed on those websites. They get very upset when people coming to those sites cannot find their articles easily. Many of these directory websites have thus, show cased their top authors by category. This makes sense and everyone is happy until;

In walks Frankenstein Derivative Article Software!

There is a new player on the block, he is a software program, one which article writing folks can buy which they can use to create derivative works of previously made articles, basically tuning 5-10 articles into 50 articles by “spinning” the sentences around. Now, those who use this software are producing less than quality articles, and 1000s of them.

This tends to drown-out the good guy article writers from the “top authors” categories. Still, before any good article authors get too awfully upset, it should be noted that we must remember where the actual traffic comes from. The traffic really does come straight from search engines and it is bar far the largest percentage.

So if you have picked your title well and your key words and content nicely, you can still do very well. Also one last point is that many articles here are “picked-up” by other website, blogs, and ezines, which adds traffic and potentially adds links-2-you. The more traffic from those other places the better, whereas poorly written articles regardless of why – spelling, punctuation, sentence structure, or English as a second language will not get picked up.

Thus, personally, I’m always concerned with the number of times my article is replayed elsewhere, and which ezines pick them up, and not merely by the number of hits here on this site, although they are definitely welcomed indeed. And this is definitely something to consider.

Lance Winslow is a retired Founder of a Nationwide Franchise Chain, and now runs the Online Think Tank. Lance Winslow believes that things need to change in this venue, but good article authors should not get too upset at this point.

Note: All of Lance Winslow’s articles are written by him, not by Automated Software, any Computer Program, or Artificially Intelligent Software. None of his articles are outsourced, PLR Content or written by ghost writers. Lance Winslow believes those who use these strategies lack integrity and mislead the reader. Indeed, those who use such cheating tools, crutches, and tricks of the trade may even be breaking the law by misleading the consumer and misrepresenting themselves in online marketing, which he finds completely unacceptable.

Author: Lance Winslow
Article Source: EzineArticles.com

The Derivative Nightmare
Banks may accelerate efforts to move trading in the $62 trillion market through a central clearinghouse or to credit-default swaps an exchange after the bankruptcy of Lehman Brothers Holdings Inc. and the credit downgrade of American International Group Inc.

Yes that is right. 62 Trillion. We are in a terrible mess.and this might just be the tip of the iceberg.Finally the State of NY came out and stated they want to regulate the credit swaps and derivatives. This sounds very good and timely, however if it is not known who owns some of these swaps or who is the counterparty.How can they regulate them. It more sounds as trying to be politically correct.

Lehman, the first major market-maker to go bankrupt in the decade-long history of the privately negotiated, unregulated business, may leave behind billions of dollars in potential losses for trading partners.

Banks do not trust each other. Banks are hoarding cash. No one knows exactly how much because there’s no central exchange or system for recording trades.

There is no counter party accountability.

The fact that no one can tell you the notional value of derivatives contracts Lehman has written the day after a bankruptcy is a scary thing, There is not a way to determine these valuations. It’s an operational nightmare and a legal nightmare of interpreting what each contract says.

Today all eyes are on AIG. tomorrow where will all the eyes be?

Andrew Abraham

http://www.myinvestorsplace.com/
http://www.capitalinvestor1836.blogspot.com

Andrew has been in the financial arena since 1990. He is a Registered Investment Advisor ad affiliate of Abraham Bedick Capital. Since 1993 Andrew has been a proponent of quantitative mechanical trading programs. Andrew’s major concern is not only total return on investment but rather the amount of risk that one would have to tolerate in order to achieve returns He focuses on developing quant models that encompass strict risk adherence and correlation. He has been a speaker at conferences as well as an author of numerous articles. Andrew has spent years researching ideas that have the potential to outperform indices as well as maintain fewer draw downs.

Author: Andrew Abraham
Article Source: EzineArticles.com