Mr Cooper Group Inc (COOP)

[SamuraiProgrammer]

Certainly something needs to be done to limit exposure.

You are absolutely correct that the insurance industry cannot adequately cover that kind of risk.

I still remember the first time someone explained swaps and swaptions (which are insured as opposed to exchange traded) to me in 1999. My immediate reaction was 'this is not sensible'.

It seemed to me (even then) that swaps and swaptions were just a way to get around CFTC & NFA regulations and limits.

At least with exchange traded futures and options, both parties are required to maintain margins in the accounts. If someone can't make margin, the position is closed before things get totally out of hand. Furthermore, in extreme situations, the exchanges are allowed to asymmetrically refuse orders based on position size. That is to say they can, will, and have told investors/speculators that the exchange will no longer accept buy orders for a particular commodity from a particular account. For proof, research what happened when the Hunt brothers tried to corner the silver market.

It is clear that the crash of 2008 was due to unfettered exuberance of people that should have known better but either did not or believed in the death knell of many large scale traders -- 'This time is different.'

To be sure, every time is different... but only in detail. The big picture is always the same... every raging bull market ends suddenly. When this happens, there are never enough exits. To quote an adage from the commodities market - 'The market has a paddle big enough to whip anyone's ass.'

I cannot believe that there is not enough computing power to ensure insurance portfolios are not overexposed. Apparently no one involved is interested in being sure that the correlations of insured securities do not add up to disaster as one failure causes another and another until, like lined up dominoes falling, everything collapses at once.

On a personal note, HOLY SMOKES! 350 lb machine approaching a corner at 150MPH? Sounds like a good way to learn to fly! LOL!

Sure sounds like fun!