My Plan to Save the Universe
About a year ago, Treasury Secretary Geitner had the nerve to come out and say that he wants to set up a fund that would "encourage" private entities (hedge funds) to buy some of the toxic assets we hear so much about that are infecting banks' balance sheets. Most of these toxic assets are junk bonds backed by mortgages, pieces of mortgages, and insurance on the junk bonds which are backed by pieces of mortgages, and even insurance on the insurance on the bonds that are backed by pieces of the pieces of the worst tranches of sub prime mortgages. There are even more complicated securities floating around on bank balance sheets, but for now we will lump all these securities into a category called derivatives. If there were no defaults, these derivatives would be generating returns in the high teens...perhaps higher. It's hard to tell because the derivatives market that these securities are traded in are opaque. They should have never been allowed to exist in the firs...