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Hopefully by now, everyone knows a bunch of banks bought CDO's, and then in '08 they collapsed, or nearly did, and took the world economy with them. If you run
by csense 7y ago
Hopefully by now, everyone knows a bunch of banks bought CDO's, and then in '08 they collapsed, or nearly did, and took the world economy with them.
If you run a bank, and you know this product is dangerous and causes banks to fail, why in the world would you buy one of these products? Maybe you told your brother-in-law to take a massive short position on your bank?
- minikites 7y agoSometimes the invisible hand of the market is invisible because it's not there.
- qeternity 7y agoThey didn’t collapse because of CDOs. They collapsed because GSEs had pushed the real estate market to ridiculous levels. The GFC was a classic case of government interference creating market distortions.
- Craighead 7y agoWeird, why would indiscriminately layering traunches of risk to fool ratings agencies not be considered the problem?
- AnimalMuppet 7y agoEven if true, that's not very comforting. The real estate market is once again at ridiculous levels...