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Marx would be laughing in his grave...
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View this Thread in Original format
| Joss Weatherby |
http://www.nytimes.com/2010/04/17/b....html?src=busln
| quote: | Remember in the months leading up to the crisis, when the Federal Reserve chairman, Ben Bernanke, and Henry Paulson Jr., then the Treasury secretary, were assuring everyone that the “subprime problem” could be contained? In truth, if the only problem had been the actual mortgage bonds themselves, they might have been right. At the peak there were well over $1 trillion in subprime and Alt-A mortgages that were securitized on Wall Street. That’s a lot, to be sure — but it was a finite number. You could have only as much exposure as there were bonds in existence.
The introduction of synthetic C.D.O.’s changed all that. Unlike a “normal” collateralized debt obligation, which contained the bonds themselves, the synthetic version contained credit-default swaps — derivatives that “referenced” a particular group of mortgage bonds. Once synthetic C.D.O.’s became popular, Wall Street no longer needed to feed the beast with new subprime loans. It could make an infinite number of bets on the bonds that already existed. |
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| Lunar Phase 7 |
I don't have a ing clue?
Grey perhaps?
Did you get a good look at his face? |
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| leph555 |
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| pkcRAISTLIN |
| are we just catching up to 2008 now nou? :conf: |
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| Joss Weatherby |
| quote: | Originally posted by pkcRAISTLIN
are we just catching up to 2008 now nou? :conf: |
No. Its just reading about those CDO and how they were built. We all know the story around the end of it, but its hilarious that these companies basically invented money out of thin air and then bet on it. |
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| Nrg2Nfinit |
| quote: | Originally posted by Joss Weatherby
No. Its just reading about those CDO and how they were built. We all know the story around the end of it, but its hilarious that these companies basically invented money out of thin air and then bet on it. |
LOL how do you think etfs that track commodities work? Or most etfs in general.
you're marketing the value of something in hopes that it becomes more valuable and take a profit in it. You can also look at a short position where you feel that the underlying asset should depreciate in value. The issue here isnt really with the actually CDO's and funds.. Its about the disclosure and insider bets. |
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| Joss Weatherby |
| quote: | Originally posted by Nrg2Nfinit
LOL how do you think etfs that track commodities work? Or most etfs in general.
you're marketing the value of something in hopes that it becomes more valuable and take a profit in it. You can also look at a short position where you feel that the underlying asset should depreciate in value. The issue here isnt really with the actually CDO's and funds.. Its about the disclosure and insider bets. |
No, I get shorts and longs and other options and trading devices, but to actually create a product that you can then go and bet on that doesnt even have any sort of value is just insanity. |
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| MGT |
| Now they're betting on life insurance or people dying. |
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| Nrg2Nfinit |
| quote: | Originally posted by Joss Weatherby
No, I get shorts and longs and other options and trading devices, but to actually create a product that you can then go and bet on that doesnt even have any sort of value is just insanity. |
As long as there is an underlying net asset value that correlates or "mimics" some sort of index. It seems to be legal. This is how most comodity tracking etfs work.
Again the problem isn't with the vehicle itself, its actually the fact that the creator of ABASCUS fund shorted his own fund, picking mortgages he thought would default. So goldman sachs is taking the hit since they did not give proper disclosure on the fund to investors.
MOST etfs function the same way and there are alot of lawsuits going on with them due to the same problem (disclosure). If you know what you're getting yoruself into, take the risk thats fine. But when you are misstating and neglelcting vital information to the investor, thats where the red flag comes up. |
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| Nrg2Nfinit |
| quote: | Originally posted by MGT
Now they're betting on life insurance or people dying. |
Welcome to the free market.
if you want to you can bet on weather too lol. |
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| igottaknow |
| quote: | Originally posted by Joss Weatherby
No, I get shorts and longs and other options and trading devices, but to actually create a product that you can then go and bet on that doesnt even have any sort of value is just insanity. |
Not any more insane than money, it has no intrinsic value its just paper. Most if not all devices on Wall street are bets, in this case the bets were on the value of the mortgages (a real thing). Read what Karmin said. |
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| Capitalizt |
| quote: | Originally posted by Nrg2Nfinit
Welcome to the free market.
if you want to you can bet on weather too lol. |
You can bet on anything..It's America baby!
http://www.intrade.com/ |
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