Quote from jem:
This has been turned over many times.
As you sell more and more premium you can look very profitable til you blow up.
LTCM was apparently selling premium til they blew up.
From what I read and the timing of the drawdowns and blow ups it seems VN followed the same business model. Sell premium promote your track record take out large management fees and hope the blow comes later rather than sooner.
All this was not so bad.... but then Wall street took that "business" con game model and put it on growth hormone. They the started selling the 2nd 20 percent to make 100 percent mortgages, Eventually option arms to anyone with a pluse.
Selling mortgages particular 2nd mortgages is the exact same concept as selling premium. Works great and you can take out billions in bonuses until the underlying goes down in value. Wall street was selling puts on real estate to the tune of trillions and trillions.
if you think it was a sincere mistake consider that Mortgages in California and some other western states are sometimes non recourse mortgages.
Those mortgages were puts plain and simple. The fed had statistics that show that when property goes down in value approximately 20 percent you have mass walkaways. And those stats were compiled when most people had to put 20 percent down.
I suppose even that would have been fine if they just blew up their shareholders money and their companies. But the bankers have destroyed america's future and sucked the tax payers dry.
Selling premium is fine with your own money. But blow up others while you pretend you are profitable and take out millions, billions and trillions is immoral in my opinion. In many cases it should be prosecuted as fraud.
Using the tax payers money is even more immoral.
Holding out premium sellers who pretend they could not see their blowup coming is pathetic.
Allowing wall street to pretend they are run by the best and brightest is something that must be stopped.
many of the recent dirtballs from wall street are parasites, Unfortunately they made so much money while running their scam they have purchased our government and many of the others.
There was a recent article which pointed out that in the old days Goldman Sachs had a motto of long run greedy. Long run greedy probably worked for america. They new model seems to be destroy america for large bonus.
