2 ms·
Person A: Invest 10 borrow 90, sell for 120, profit 10. Person B: Invest 10, borrow 90, sell...oops market has turned, default on borrowed money. Bank folds,
by biohacker42 17y ago
Person A: Invest 10 borrow 90, sell for 120, profit 10.
Person B: Invest 10, borrow 90, sell...oops market has turned, default on borrowed money.
Bank folds, CDOs lose their AAA credit rating, investors lose their saving investing in CDOs.
Total profit 10, total loses due to leverage: far far greater then 10.
- ars 17y agoAnd the person that you bought it from in step B made money, and you lost money. I still see a perfect symmetry.