Joe's Natural Path To Profit

[derek2000]

Let me try to explain the concept.

"Synthetic CDO is just like your bet on the football. For you to bet Joe (Montana) to win, someone has to bet him losing. You are not purchase the team, or the players. You do not even own football scores. They are just reference points for you to place bet. Abacus was the book marker, and GS just rans the casino and should not be held responsible for your loss."

I do not necessarily think people are dumb. They just could not believe that our tax money went to finance gambling operations on The Street and to bail out the losers, while winners kept all the coins.

I was trying to explain to someone in my office this morning that a synthetic CDO MUST have a short position by DEFINITION, since no actual mortgage bonds are in the deal, they are just used at the reference point.....
He looked at me with a horrified stare and said: "Ahhh, that's baloney, no one would invest in something that really did not exist"