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Shorting is a risk. Shorting with big money is a big risk. In this case though, my impression is that certain people who actually looked at the data knew it wo
by talmand 10y ago
Shorting is a risk. Shorting with big money is a big risk.
In this case though, my impression is that certain people who actually looked at the data knew it would happen. Not like "I think it will happen", it was "it will happen sometime in this month of this year" kind of thing. Because they knew when those stupid ARMs would kick in with their adjustable rates on top of the obvious number of failed mortgages. The risk wasn't that it would not happen, it was that high level people in finance and government would take steps to keep things moving along which would prevent them from cashing in. There was a great deal of fraud throughout that whole thing propping up the failed system.
- roywiggins 10y agoThe other risk was that the entity on the other side of the bet would be wiped out in the crash and not be able to pay out.
- talmand 10y agoThat was part of the problem in delaying them from cashing out.
- sliverstorm 10y ago"take steps" kind of sugar coats it, from the film it sounds like the banks strongarmed the ratings companies to lie about the quality of the derivatives as the ARMs folded.
- talmand 10y agoThat was my impression from sources outside the film as well. Like it was stated in the film, "if we rate them lower they'll go down the street to our competitor".
- lmm 10y ago> Shorting is a risk. Shorting with big money is a big risk. Calling it "shorting" suggests the downside was unlimited (as it is when shorting equities). That wasn't the case for this trade.
- gozur88 10y agoIt was not difficult to see the housing bubble would burst. The problem is you can't make money knowing that without getting the timing mostly right. That's the hard part.