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Posts by MSchapiro

If the state were to guaruntee the corporation in all cases, yes. By moving lots of business to exchanges and making the risks covered with capital, as well as requiring plans for dissolving the entities in case of bankruptcy this is no longer the case. Although small banks are not the recipients we're talking global instituations here. 
 Yes you are correct about Glass-Steigel. It doesn't really matter much though, its effect have been greatly exaggerated. It just becomes a question of is the bank that is investing the money also the one getting the deposits or is there an intermediary.  I believe the bail out was an excellent idea.  Capitalism is a mediocre system at best, but it is the best one we have.  There are other ways to fix "too big to fail". In fact I think Basel III has done an excellent job....
When what wasn't allowed? 
I agree on a macro level, but I worry lots of small events could cause a short term VIX spike back to 14-16. Although Vix is now at 12 and a contago of 21%, so youre hitting it big today. 
If I wasn't so busy it would be interesting to look at the cost of a put compared to the contango collected from holding XIV. 
What is your strategy here? Just collecting the contago and praying nothing happens? I sold out of XIV with a ~25% gain after buying in post Brexit. Have started trimming my ZIV position as well. VIX is so low I think it's easy to create a spike as temping at the nearly .7% a day contango is.  Mid term VIX is still hovering around 19 which isn't that below historical averages. Contango is still a reasonable spread of 2% a month. 
Feel free to message me if you ever want to discuss, it has been an unusually respectful debate. To keep my answer short,  1. As as I said with my fire example, it's not that the risks weren't foreseeable, but until the office down the street burns down many people weren't modeling that the paper sitting in the office next door was flamable. Maybe a few super smart (or lucky) guys were, but they generally didn't work at the ratings agency. It was really uncapatalized...
Finance is deceptively simple, but uses incredibly complicated words to scare everyone off so we can get paid more :).  Jokes aside I used to teach both interns and incoming analysts at a structured finance hedge fund as a summer job. The analysts and associates always needed things explained more simply, ironically, and I became known for my long winded sometimes confusing and sometimes clarifying metaphors. 
A high risk asset can never lower the overall total risk of the portfolio, but it could improve risk adjusted return. You can define risk as a total capital loss for the purpose of the instrament although obviously every investor may value a different set of risks.  That said structured finance in particular aims to solve this problem. In a normal bond issue everyone sits and the same level and has default risk if the bond ever defaults. Structured finance takes a riskier...
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