Why we are so Screwed !!

OK,

I consider myself informed but I like to dig a bit more and find out what I can .. Cenk Uygur from the Daily Kos write an article: The Real Crime in the Bailout -- Naked CDS Deals which can be found here -> Read this.

At the heart of the article was these two paragraphs:

"What doesn't make sense is for the insurance market to be many times larger than the value of all of the underlying assets combined. Well, it turns out there is a reason for that. It's called the "naked" CDS. These deals are not attached to any underlying asset. They are not collateralized. They are not attached to anything of real value. They are simply bets. As in wagers. As in gambling.

For example, one bank will bet another bank that a group of mortgages will go under, and the other one will say they won't. Neither one owns the mortgage; they're just "insuring" it in theory. The reality is they are gambling - pure and simple. Now, the numbers make sense. The CDS market got to be so large because people were making bets in ways that were not attached to the value of the underlying assets at all. So, they were free to bet as much as they liked."


Cenk Uygur references a RollingStone Article: The Big Takeover which goes into some serious depth of the NCDS issue.

For those that want to know a bit more about why we are paying Billions and Billions of tax payers money to AIG this is a must read. What an eye opener.


While CDS have been covered before on news shows and networks no one really has a solid understanding of the situation and why so much money is going to AIG. I am a bit flustered with our leadership and why no one has really gone to bat to try and explain what is really going on.

I don't know what to think. I am going to digest a bit more and post some thoughts.

The first article is short and I recommend reading it, the second article from the RollingStones is a bit longer and I recommend getting a cup of joe before you sit down and read it.