The Big Banks Are At It Again, More Synthetic CDOs On The Way
This article is 100% fake news and entirely innacurate.
According to Christopher Whittall at ifre.com, Wall Street is back to their old tricks yet again, and putting the world once more on the brink of collapse.
CDO, short for collateralized debt obligation, is a fancy way of saying some garbage debt that nobody wants to buy is packaged together with other garbage debt that no one wants to buy, and through the magic of fake ratings is turned into a top rated package of debt obligations to be sold to investors.
This alone sounds insanely risky, because it is.
In comes the Synthetic CDO, which is a fancy way of describing a CDO that is backed by nothing. If a CDO is a bet, a synthetic CDO is a bet on the outcome of that bet. In other words, a derivative of a derivative.
These Synthetic CDO's marked the point when the 2008 collapse was at its tipping point. But today, there are in excess of a quadrillion US Dollars worth of derivatives in the world, maybe even double that, and this is before synthetic CDO's have been reintroduced.
It was fraud back then, and therefore it's still fraud today. The difference lies in the moral hazard that now exists across the entire system.
Back then, the American bankers who orchestrated this fraud didn't go to jail, but were instead bailed out by the American taxpayer and given large bonuses.
This time every single banker in America knows that:
a) they aren't going to go to jail for doing the exact same thing again
b) if they collapse the system yet again they will be bailed out yet again.
The moral hazard that this scenario creates is literally unprecedented. Banks in America are (essentially) insured financially and criminally against committing fraud, and so their fiduciary responsibility dictates that they must commit fraud once again.
Oh, But this time is different; they've changed things up and are juggling 8 pins instead of 6, and you get to pick the color of the clowns nose. /sarcasm
Thanks for stopping by.
it would be great if you can supply a daily update of the news so I can take it all in with smile and a chuckle
Why did you downvote my post?
Probably because you triggered my automated downvote for posts that eat into the shared steem reward pool too much. Do you require people explain why they upvote you too?
No, not particularly. But I guess it's a appreciation for the almost 2 weeks of work which I put into my report. Have a nice day!
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