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Reply #120: CDOs, MBSs, and naked derivatives need to be reigned in [View All]

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Home » Discuss » Archives » General Discussion (1/22-2007 thru 12/14/2010) Donate to DU
soryang Donating Member (642 posts) Send PM | Profile | Ignore Sun Dec-12-10 09:27 AM
Response to Original message
120. CDOs, MBSs, and naked derivatives need to be reigned in
Credit default swaps where the investor has no interest on the underlying principal needs to be prohibited.

Here is what happened by analogy. I take out 10 insurance policies on each home in my neighborhood. Then I burn the entire neighborhood down. I demand my payment from AIG even though I have no conceivable insurable interest in any of these homes. AIG can't pay. There are thousands of claims like these from all over the world. AIG and other CDS shorts around the world can't pay. So I get my old buddies in the Congress, the Treasury Department, the Fed, and the White House to guarantee payments for my arson, fraud and gambling problem.
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