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a little different. In an option as I understand it, one must exercise the same to buy at a preset price. This exists elsewhere. I'll give you 100 bucks to keep your car for sale to me for 2000 bucks for a certain period. In this scenario, in particular the CDS, "insurance policies" were sold against the default of mortgage securities to third parties who held no interest in the same. Like me buying fire insurance in someone's house even though I don't have an "insurable interest" in the same. Guy defaults on his mortgage, not only does bank lose the principal, but that bank or another institution has to pay out to a third party, who suffered no loss, another similar amount. collapse of realty prices comes along and the whole house of cards comes crashing down, aggravated by clever "bears" who saw money to be made, particularly out of the subprime stuff that was virtually predestined to fail. Yeah, it does differ from traditional "short sales" or selling short scams where stocks are borrowed in kind from a seller with a promise to be paid back in the same form and then cashed out with a view to a decline in price; then the paper is rebought at rock bottom prices and tendered back to the lender to settle the debt for big profit. Stories of "colorful" characters like Jay Gould and Daniel Drew exist who did that to their own companies when they decided they were through with them, stuff that is illegal today and which were glaring examples of what was called even in those days "financial piracy" showing how often capitalists much less to advance industry and the forces of production as they claimed they did. Drew is the guy from whom the term "watering stock" comes from. In the 1820s before entering Wall St., he worked as a cattle driver bringing herds down from upstate to the city. He'd stop off around Harlem, then a nearby rural hamlet, and water em up before they hit the scales downtown. His downfall came in a big overreach when he tried to do that to Commodore Vanderbilt-supposedly a big infrastructure guy-circa 1870 who bankrupted him by pumping his entire fortune in keeping his stock prices up. On Fri, Jun 3, 2011 at 7:13 PM, DW <dwalters...@gmail.com> wrote: > > Interesting. The way they are described it sounds like a form of > simple stock options which amount to the same thing, betting on the > performance of the stock, or the spread between the current price and > a future price (up or down). > > David > ________________________________________________ Send list submissions to: Marxism@greenhouse.economics.utah.edu Set your options at: http://greenhouse.economics.utah.edu/mailman/options/marxism/archive%40mail-archive.com
