Microblog: A very long article Wikipedia article on the orientation of toilet paper [Jun 7th, 22:52] [R]

Friday, May 11th, 2018

The Big Short

Categories: [ TV/Cinema ]



One fund manager notices that the US housing market was rotten two years before the 2007 crash. He invests in credit default swaps, asking an investment bank to create a market for them, betting against the market, despite the common idea that the housing market cannot collapse, because it never had before. A few other investors learn of his analysis and follow his steps. The funds' investors are not happy about the fact that they need to pay large premiums for two years, but the managers are convinced they are right. In the meanwhile, some of them investigate the situation and discovers that mortgage brokers are selling loans to people who will not be able to pay them back, re-selling those mortgages to banks that are eager to turn them into financial instruments, MBS and CDOs. These instruments are well rated by complacent rating agencies, which helps keeping their values artificially high when more and more people start to default on their payments. When the value of the CDOs finally plummet, those traders sell their CDS, making enormous profits, but most of them give up on finance, disgusted by the fact that the system is rotten to the core.

[ Posted on May 11th, 2018 at 23:09 | no comment | ]