Banks Reviving Synthetic Bets as Volcker Blasts Default Swaps

[katty]

more: http://www.bloomberg.com/apps/news?pid=20601109&sid=aCb6JDT0sOWc&pos=10

Jan. 26 (Bloomberg) -- Wall Street is marketing derivatives last seen before credit markets froze in 2007, as the record bond rally prompts investors to take more risks to boost returns.

Bank of America Corp. and Morgan Stanley are encouraging clients to buy swaps that pay higher yields for speculating on the extent of losses in corporate defaults. Trading in credit- default swap indexes rose in the fourth quarter for the first time since 2008, according to Depository Trust & Clearing Corp. data. Federal Reserve data show leverage, or borrowed money, is rising in capital markets.

Investors who retreated to the safety of government debt during the financial crisis are returning to the simplest forms of so-called synthetic collateralized debt obligations after last year’s record 57.5 percent rally in junk bonds left money managers with fewer options.

[jtrockville]

1. This junk paid of handsomely before (they all got bonuses, right?)

Why not go for round 2?

[katty]

2. of course, addiction operates that way-and then someone

will bail your ass out when you begin running on empty-or not.

[midnight]

3. K&R Naturally the rich are so very grateful for the working masses bailing them out.

[KoKo]

4. Bring those Old Folks In! The ones not getting any returns on CD's or Savings Accounts!

Let's get the Old Folks in and then work on ridding them of their SS and Medicare! GO FOR BROKE!

Wall Street needs to get it's MONEY BACK...since they are "paying off the TALF!" :rofl:


Get those SAVERS, NEXT! BRING THE WHOLE DAMNED SYSTEM DOWN!

(Yes, it's a bit of a rant, here...but there's truth in the strategy)