Marc Malone
2009-03-21 10:24:45
#23 Alex – You’re mostly right, but subprime mortgages were the fuel for the CDO’s/CDS’s. They were bad assets passed off as being covered by CDO’s. Later chopped up and mixed with other things, they were the basis for all the CDS’s. They are the foundation for the swaps, items packeged and sold again and again. As long as they keep defaulting, the money has to continue to be paid out to pay those who essentially shorted the market.
If we just allow the issuers to go under, the bankruptcies will allow the swaps go away. No more liability: No more transfers of wealth.
