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September 29, 2008



Swaps and Derivative are rather simple to understand. Did you know that you can payoff all the sub prime loans for $536,964,808,868. If you payoff the loans of those that had been late in the last 12 months it would be $227,136,207,581. Its a ponzi scheme look at the banks Revenues and compare them with their net income the annual reports are available online. nomedals.blogspot.com ... look at the AIG annual report.


What's amazing is that its the same damn notes in every cycle. steep yield curve, low rate environment, "range accruals and TTIBS", flat curve, "PEN Equity notes" etc, etc. They always blow up....and then three years later, retail just buys them all over again!


I guess we should have expected Goldman would go out and be the biggest player in this shizzle. I recall being at banking presentations in '05 and watching the real estate derivative guys swamped by students. That was THE coolest thing around.

And LOL about the structured note sales to retail. Those should almost be illegal. During one of my internships I remember sitting in as one broker explained a BoA note to a client. It was the equivalent of listening to a High School gym teacher explain string theory! Sadly, I would bet it was rather common during the time period and that a lot of high end retail accounts are holding exposure to these assets.

Rubicon S

So I guess GS won't be hiring you now?

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