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Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: ggersh who wrote (29243)	7/12/2010 4:22:13 PM
From: RockyBalboa	Read Replies (1) \| Respond to of 71442

He was even allowed to keep his bounty after he was separated from MS. Guy called howie hubler, sounds like hubris: seekingalpha.com But here were some smarter than the stodgy i-banks. And it put a name behind the hedge funds in the short movie "A crisis of credit". There, a name never appeared - but someone fronted the money and it has´t been the i-banks´. >>>>> The point here is that the maximum downside on Magnetar’s long positions was much smaller than the maximum upside on its short positions. And when everything broke down and just about everything went to zero, Magnetar’s shorts ended up making it enormous profits. At the time, it looked like Magnetar had made a bullish bet on CDOs, and got lucky when its offsetting short positions wound up being massively profitable. But Jesse and Jake see something a bit more nefarious — while still legal — going on. They reckon that Magnetar wanted to be short all along, but the only way of being short was by making sure that the synthetic-CDO machine kept on churning. And the way to keep the synthetic CDO machine churning was to sponsor the CDOs themselves, by buying the risky equity tranche. They write: Magnetar’s purchases solved a crucial problem for the banks. Since the equity was so risky and thus difficult to sell, banks didn’t like to create new CDOs unless someone committed to buy them. Indeed, such buyers were so crucial that Wall Street referred to them as the CDOs’ “sponsors.” Without sponsors, Wall Street’s mortgage bond assembly line could grind to a halt, and with it bank profits and banker bonuses. <<<< .... >>>> The saddest part of the whole story is the suckers — naive investors like IKB, a small German bank which had to get bailed out by German taxpayers in mid-2007. They thought they could get high yields on safe securities, and they were wrong. <<<<