"Think again of the insured house. Many institutions hold insurance on the house; on the other side are insurance companies and the like making an opposite bet. If the house is destroyed, one group of institutions wins and the other group loses. Considering all institutions together, no money was truly lost — it's what economists call a zero-sum game. In good times, risk hungry banks loved this game, but now they have become risk averse, and the game seems to have changed. So how can many of the banks simultaneously claim enormous swap losses with no bank claiming significant profit?
Here are two possibilities: either the vast majority of all swaps — not just AIG's — are held by investment banks, or a significant portion is held by other financial institutions like hedge funds." Ari J. Officer in Time Magazine
YES WE SHOULD FIND OUT WHO THE WINNERS ARE
YES WE SHOULD REGULATE THIS STUFF
YES NOTHING HAS REALLY BEEN LOST
Usually I am against changing the rules. This time the rules are corrupt and must be changed.
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