How and why the financial industry imploded. A very detailed and insightful article from the inside. It's a good read.

http://www.portfolio.com/news-markets/nati...ll-Streets-Boom

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FrontPoint had spent a lot of time digging around in the dog shit and knew that the default rates were already sufficient to wipe out this guy

 

Good read.

I blame you though. If you had stepped in a long time ago this might have been prevented

 

This could and can be easily solved. The solution is so simple its not even funny and costs nothing. Lets see who knows the answer.

 

^^^ Put strict, conservative leverage and capitalization limits on derivatives, and institute a process similar to margin calls when counterparties fall out of compliance.

 

Thanks for the read, very insightful.

 

That makes too much sense for someone to actually implement the rule.

 

"The Lomas Financial Corp. is a perfectly hedged financial institution: It loses money in every conceivable interest-rate environment."

 

Shoot all the bankers?

 

I just read the article and it pissed me off.

 

I think that's the idea.

The default swap market is a $64,000,000,000,000 industry (or was). That shit goes bad and the US government is left as co-signer it's game over. That's why they need the money from congress so bad and why they won't tell you what it's for or how they are spending it. Makes Madoff's $50B scheme look like shoplifting by comparison.

Obama's executive order of today should shed a lot of light on what's going on. The truth? You can't handle the truth!

Mortgages were the left shoe, CDSs are the right shoe and they haven't dropped yet. A big giant club foot shoe. The Fed is shedding cash left and right trying to keep the CDS genie in the bottle by preventing all those bad loans the CDSs are written against from going bad. They will drop like dominoes if they go.