If Soros's bet had gone against him, he would have lost all of his investors' money and been left penniless. There would have been no bailout waiting in the wings.

The guys selling CDSs they couldn't pay out had none of their own skin in the game, and were profiting from the presence of then implicit (now very EXPLICIT) government backstops. When they lost money, the public was forced to pay through devices like the AIG bailout, TARP, ZIRP, etc.

There's no legitimate comparison between the two.

> If Soros's bet had gone against him, he would have lost all of his investors' money and been left penniless. There would have been no bailout waiting in the wings.

Well, no. This is explained in the article: If Soros' assumption (that the exchange rate would plummet) hadn't been realised Sterling would've stayed at the lower bound of the ERM and Quantum wouldn't have lost much at all.

We can have reasonable confidence in that assessment in hindsight. At the time, I would have been unwilling to gamble my net worth against the possibility of some unforeseen event causing a spike in the value of the pound. It was a non-zero risk.

Soros clearly had confidence in it. That's why he's the player that won the pot.

There was a lot of fraud involved in the banks and mortgage brokers who made hundreds of thousands of liar's loans: the fact that nobody was prosecuted for that fraud is a failure of the justice and regulatory systems..

I have regularly argued that much of it was, in fact, illegal. At a minimum there was a lot of negligence with regard to fiduciary responsibility. I would also argue that there was a fair amount of fraud from borrowers, mortgage brokers, banks, and so on all the way up to the top financial levels.