Posted On: October 15, 2008, 9:37 am CDT

Posted By: Vlad

... are the only two explanations for the CDS mess. My largest purchase was my home. Did I know how many nails and screws and pieces of plywood were used? No, however, I did know the basices i.e. the square footage number of bedrooms etc. So I am to believe these smart people on Wall Street and at Fannie and Freddie did not know what they were purchasing, or more importantly who was insuring these purchases for 100's of billions of dollars? Folks this is not rocket science. Lets say I was buying 200,000,000,000 in CDS. If they were all mortgages at 200,000 each, that would be 10,000 mortgages. With an excel spreadsheet I could easily breakdown each mortgage I purchased to insure with the loan information by FICO, income, market value etc. and come up with a probability on foreclosures and set a rate for coverage. Therefore I believe there are only two explanations - Fraud or Ignorance.