Derivative Stew -- Taste Before You Order
As I watch the various Big 3 car moguls bow before Congress with their beggars' cups looking for a bailout, I am reminded of a recent visit I had at a local diner. I was sitting at the counter minding my own business, when a gentleman sitting next to me asked about the stew on the menu. The waitress said, "Don't worry it, it is delicious". He ordered it. A few minutes later, he tried it and complained that it was too salty and had too many carrots in it.
The moral of the story? Ask questions before you buy. So many big investors were sold "Derivative Stew" over the years. The sub prime mortgages were bought, sold, packaged, repackaged, leveraged, resold, etc The buyers were told not to worry--the genius's on Wall Street put these packages together -- how could they not go up forever? Well, now all these wonderful investments have come crashing down.
Now Hank "Panic" Paulson can't make up his mind how to waste the $700 billion in bailout money. Just yesterday, he said that maybe he will let the next administration blow the remainng $400 billion (of the original $700 billion given to him to waste). The next time you buy a "derivative stew" from someone on Wall Street, ask what is in it !
The moral of the story? Ask questions before you buy. So many big investors were sold "Derivative Stew" over the years. The sub prime mortgages were bought, sold, packaged, repackaged, leveraged, resold, etc The buyers were told not to worry--the genius's on Wall Street put these packages together -- how could they not go up forever? Well, now all these wonderful investments have come crashing down.
Now Hank "Panic" Paulson can't make up his mind how to waste the $700 billion in bailout money. Just yesterday, he said that maybe he will let the next administration blow the remainng $400 billion (of the original $700 billion given to him to waste). The next time you buy a "derivative stew" from someone on Wall Street, ask what is in it !
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