Financial Engineering

Well, there is a lot to talk about but little to say. They say greed is a powerful impetus for monetary wealth and excesses, but to say that the financial markets swam in greed is a gross understatement. No, ladies and gents, the financial institutions and their sprawling counterparts in the form of private equity firms, hedge funds and brokerage firms were defined by avarice - and their appetite became more insatiable. How did this calamity being? What set it off? Why does Wall Street excessiveness send seismic shockwaves to the global economy? How can the markets lose upwards of $1o trillion dollars in market capitalization (not inclusive of shadow, implicit costs)? If I told you it was as simple as a homeowner not making their monthly mortgages, you wouldn't believe me. The sad part is, I'm not lying.

For my benefit and yours, I'll break this upto multi-faceted components: Subprime mortgages; easy access to credit with a negative effective interest rate; enhanced competition for structured, highly complex illiquid securites packaged with a plethora of mortgages: collateral debt obligations and other ugly mortgage backed securities; negative equity; HIGHLY and I mean jawdropping highly leveraged financial institutions; and lastly, CREDIT DEFAULT SWAPS, the mother of all monsters.

As of now, I don't have the time or energy to write anything more. Will update soon