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Why Wall St. Needed Credit Default Swaps [view article]
This is very fascinating, however, but this looks to be the exact same thing as what Loyds of London used to do. They used to insure everthing, and sell the risk to members who agreed to cover in case of loss. In their case, the rich people of merry old england got paid for putting up no cash except in the case of a loss, which rarely happened. The members had unlimited liability. (seems stupid, but the houston astrodome was never going to fall down). Then they got greedy and started doing reinsurance and an american hurricane wiped them out. Long story short, they paid. In this case, this is simply insurance. The accounting is legit, provided the insurer actually pays. You lock in the profit, guaranteed. Even better if they default, in reality, so long as the insurer pays. Are you saying, on all of theses insured loans that the insurer cannot pay? or just a portion? Surely, the majority will pay, and the majority of the insurance is good. NO??? Apr 28 11:36 AM

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