Quote:
Originally Posted by KC Jones
Excellent post 
However I would add a 4.5 in there...
4.5 These securitized debts (repackaged into investments that could be sold), were then leveraged into credit derivative swaps. I seriously don't know what the **** that really means despite reading about it, but as far as I can tell it's a side bet placed on whether or not the original debts will be paid. However we allowed side bets worth far more than the initial debt. So maybe you had 50 billion in actual mortgage debt out there, but with 500 billion in side bets on whether or not it would be paid. AND these finance wizards BORROWED to make these side bets. |
That's actually a quite decent explanation of derivatives.
It makes my brain hurt just thinking about how many people made -- and then lost -- so much money, and were that leveraged, without anyone saying a ****ing word about it.
Well, not anyone who was listened to -- those guys were called "alarmists."
Although history might call them "prescient."
I'm just glad I have another 30 years or so before I plan on retiring. I just may make up all I lost by then ...
MM
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Oh, wait ...
