Double Speaking Double Dipping 0
Interesting phrasing, “overlapping contracts” and “redundant trades” (emphasis added):
(snip)
What those phrases mean was explained in this interview with Frank Partnoy.
The financial geniuses sold the same derivatives over and over to different buyers, because they thought nothing would ever go wrong. Not only did they build a house of cards, they printed the damned cards themselves.
In other words, the city slickers kept selling the Brooklyn Bridge repeatedly, obsessively, to different suckers–in this case, the suckers were not country hicks, but other city slickers.
Then, one day, all the owners of the bridge showed up at once, to discover not only that hundreds of people had deeds to the bridge in sole tenancy (that is, each all to his lonesome), but also that, in the meantime, the damned bridge had fallen down.
On Wall Street, this is called “creating wealth.”
