Investment Landfill:
How professionals dump their toxic waste on you
http://goldnews.bullionvault.com/files/Investment_Landfill.pdf
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Excerpted from above:
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"You used to have to give me all your money to buy a boring old cash flow CDO, and then you were both lending your money and accepting the potential risk of the borrower defaulting. What I have for you today is the ability to accept only the better half of that deal.
"This new instrument means you can keep your money where it is, earning great returns in the stock market or wherever you're currently chasing performance, yet you will still receive income in return for underwriting the risk on a package of credit default swaps in the mortgage-backed security market.
"Look, I've got a great credit rating on this thing, and because we have eliminated the cash-borrowing aspect of the deal, I can sell you $1 million of synthetic CDO income for just $200,000.
"You get no extra risk above what you’d ordinarily accept, and a huge yield on your investment. You want in?"
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