Re:So long, euro?
by jackfoxy on Thursday April 29, 2010 @03:59PM
(#1305799)
If anything has been learned from the past decade's ramping up and unwinding of the Collateralized Debt Obligations (and related matters), it's that today's politicians and technocrats have taken leave of the notion of moral hazard, as if they could repeal it. Until moral hazard comes back into vogue, I fear the sky is the limit for the bad things that can happen because the game will always be to act in your short term interest before the next guy does.
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Very true. Reminds me of this email I got recently from my brokerage:
While the Fed is lending money at almost zero interest rates, why not take advantage of it through <brokerage name>? <Your broker> will lend up to $566,000 at 1.25% for every $100,000 in a Portfolio Margin4 Securities Trading account. As of 4/5/2010, more than 500 stocks had a dividend yield of 5% or more.
Your broker just buys a CDS on you, and then when you default, they get their money and whatever stock you bought. And since most people don't default, the bank that issued the CDS makes money too.
Playing numbers games helps everyone grow their capital. You just have to do it intelligently.