Old 02-21-2009, 02:38 PM
  #5  
nat
Senior MemberCaptains Club Member
 
Join Date: Oct 2001
Location: upthecreek
Posts: 4,843
Default RE: Help Me Understand This Bank Bailout Thing

EyeBall

They had to have the money because they were counter party to derivative contracts
known as credit default swaps.

They were on the losing side of the trade and had to pay up !

So, the taxpayers paid the them and they paid the winning side of the contract



Please make a note that you never hear about the winning side of the trade ?
I suspect the biggest winners are private firms at the top of the food chain and power pyramid

it's fair to assume that some really smart people were aware of the incredible risks being taken, and they positioned themselves to benefit when these (toxic assets) failed


when Lehman went under the bankruptcy court paid zillions to JP Morgan the very next day



but maybe your confused about thier total worth after the share price collapse ?
it's possible to trade on the exchnage for less than your book value
some companies are trading for less than thier cash on hand

this is where the removal of the uptick rule was done to benefit some very big short sellers, they pound and pound and pound the shares down
They need to reinstate the uptick rule
nat is offline