Remember Long Term Capital Management?
May 17, 2005 3:44 AM Subscribe
Remember Long Term Capital Management? The hedge fund whose collapse threatened “a systemic crisis in the world financial system”? Most people in the investment industry claim that they have learned the lessons of LTCM, but what about the rise of synthetic CDOs, “complex structures that employ wads of credit derivatives to build leverage on top of leverage-what some skeptics call "imaginary" structures?" Investments in these financial instruments has exploded from under 1 trillion USD in 2001 to more than 5 trillion at the end of last year. Are problems with synthetic CDOs behind the recent rumors of "hedge fund frailty?" largely stolen from The Agonist
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