A "sophisticated" con job is still a con job at heart. It just draws a higher grade of pigeon. If a really smart guy didn't learn from his mistakes the first time, then maybe they weren't exactly mistakes after all. How is it that risks that are described as very small keep blowing up with an almost rhythmic regularity? As an aside, have you read: http://www.amazon.com/Traders-Guns-...bs_sr_1?ie=UTF8&s=books&qid=1227020483&sr=8-1
No, but it looks like an interesting book. thanks for the suggestion. As i stated earlier, no one talks about the winners on the other side of every losing transaction---- i assure you, they exist in similar numbers. surf
First of all, the elections are just a big theatre production, no matter who you vote for, so that point is moot to start with. Second of all, Bush admin had little to do with the derivative markets. In fact, the key events that allowed & started this latest racket were in the 1990s when the Glass-Seagull act was repealed and the Fed started recognized these derivatives as viable financial instruments. Third of all, you still are not getting it. Whether the average joe defaulted on the mortgage or not, those derivatives are worth sh*t. You cannot create assets out of a mortgage which are 10 times the amount of the mortgage.
Assurance is good, evidence is BETTER! You are assuming that: 1. The majority of new homebuyers bought it for a quick profit, not to live in the home. 2. Most of these buyers MADE money. #2 is an obvious fallacy, since in bubbles the majority of people get hurt and very few are the ones who get out at the top. Bubbles are kind of like Ponzi schemes and the majority of people come too late for the party....
The Majority?? Hardly Surf... Think about it - middle class folks get lucky...their house prices rises substantially, and they upgrade to a house beyond their means, and sell their first house to a Subprime borrower... Now you have 2 losers... And I assure you, that is the majority...
What is your point? Those "deadbeats" are getting the standard deadbeat treatment. They lose their home, they destroy their credit and have defficiency judgements after them. Did you care this much about them back in 1990s? Meanwhile you are willingly handing over your money to the banksters who were the primary driver behind the financial crisis. And those guys in return are giving you a big "FUCK YOU" as they refuse to provide liquidity while paying themselves big salaries & bonuses.
I know you are not a bright guy but let's see if you are also really dense. Whether the mortgage was defaulted on or not did not make a difference that these trillions of derivatives are worth less than the paper they were written on.
One reference point at a time, as our exchange was about hedge funds. You keep referring to risk and reward, and that's all well and good. But, for example, guys like VN do next to nothing to mitigate risk. They add no discernible value. They just get paid a lot of money to flip coins while chanting the "no risk, no reward" mantra. It's a great gig if you're not too queasy about moral hazard except for the inevitable, and fairly predictable, downtime.
pEkelo, you have a great understanding of economics, so i am surprised you are missing the point here. your leaving out the other side of EVERY transaction. everyone who buys at the top, a corresponding person is selling and winning. Those who bought to live in pre bubble, many are still nicely positive and will be able to sell profitably even in a depressed post bubble market. it is an equal amount of winners and losers-- and i will go out on the limb stating that the winners are actually in greater numbers due to the long term upward drift of real estate prices , etc. surf