yeah, 60 minutes dumbs you down.
I have a lot of respect for James Grant. He's no novice to the camera. I wonder if he's happy with the entire piece. In any event, judging by your post, I'd say it had its intended effect.
***
CDS are a fascinating market, and they deserve an impartial study, not a soap-opera.
Finally, the problem with the instruments were no more or less than the problem with any other investments. The cause of "the mess we're in" was that investments in these instruments were leveraged wildly; and that the underlying assets were also leveraged wildly. Bad investments happen. When they're leveraged, they're catastrophic. This has as much to do with Glass-Steagal as it does with CDS. While there is much to ponder about CDS, this piece doesn't even come close to an intelligent inquiry.
I was going to click on it until I read that it was from 60 Minutes. They were the pioneers of deceptive television journalism.
We’ve heard so often that the swaps we a zero sum game. I guess when the economy was doing well there we some winners and losers but it was mostly true. When the real estate bubble started to break it became real clear real fast that the CDS market ,instead of insulating a firm ,essentially interconnected to each others losses. Instead of the system acting like a cable with multiple strands it was more like a chain where one bad link could cause total failure.
I have a cursory understanding of CDS’s, and it seems to me that liberals tend to blame these as the reason we’re currently in the economic crisis we’re in.
I kind of view CDS’s as a nuclear reactor. Absolutely, nuclear reactors need some regulation and oversight, so I agree on the liberals on that point. However, what I disagree with is that they are the cause of our current problem.
You cannot blame a nuclear reactor for a massive explosion if a couple of guys, say hypothetically named Dodd and Frank, carried 15 sticks of dynamite and stuffed it under the reactor and blew it up.
I think I would place the blame the two guys no matter how imperfect the reactor was in the first place.
James Grant is a genius and has been a dour hard money guy for decades.
He has been skeptical of the way Wall St does things for decades and same for our economic system
He is finally right and so am I in that same way as Grant ever since I read his book "Money of the Mind" circa 1994. James Grant has been a muckraker and gadfly of the highest order and irritating the economic powers that be for years longer than newbies like Nouriel Roubini, Mish and Peter Schiff.
I'm shocked how right I am but I will admit it took 15 years longer than I thought it would
Money of the Mind: Borrowing and Lending in America from the Civil ... - Google Books Result
by James Grant - 1994 - Business & Economics - 544 pages
The result is required--and wickedly entertaining--reading for everyone who wants or needs to understand how the world really works.
books.google.com/books?isbn=0374524017...