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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?


To: Alighieri who wrote (466501)3/26/2009 9:23:42 AM
From: Road Walker  Respond to of 1576881
 
,i>But then the banks have to absorb the losses from the defaulting assets...how does that help the situation?

Assuming they default; they are not going to zero. Part of the problem is the leverage... people placed bets with CDSs when they didn't own any of the assets. So a failure of an asset creates a hole that is 10X or 100X the original value... with no funds to make good on the liability.