Satyajit Das is one of the world's leading experts on credit derivatives (financial instruments that transfer credit risk from one party to another). Das is the author of a 4,200-page reference work on the subject, among a half-dozen other tomes. Banks and hedge funds pay him consulting fees; he says that the jig is up. And NOT because of "silly know-nothing borrowers" who took out too much mortgage debt as some would have us believe.
This system was the biggest con perpetrated on the masses since the fire at the Reichstag vaulted Hitler into power. And these are masses worldwide, not just Americans....ugh. I have suspected for some time that the lunatics were running the asylum. Looks like that may be true.
"Like an ex-mobster turning state's witness, Das has turned his back on his old pals in the derivatives biz to warn anyone who will listen -- mostly banks and hedge funds that pay him consulting fees -- that the jig is up.
Rather than joining the crowd that blames the mess on American slobs who took on more mortgage debt than they could afford and have endangered the world by stiffing lenders, he points a finger at three parties: regulators who stood by as U.S. banks developed ingenious but dangerous ways of shifting trillions of dollars of credit risk off their balance sheets and into the hands of unsophisticated foreign investors; hedge and pension fund managers who gorged on high-yield debt instruments they didn't understand; and financial engineers who built towers of "securitized" debt with math models that were fundamentally flawed."Defaulting middle-class U.S. homeowners are blamed, but they are merely a pawn in the game," he says. "Those loans were invented so that hedge funds would have high-yield debt to buy."