“We refused to touch credit default swaps. It would be like buying insurance on the Titanic from someone on the Titanic.”
– Nassim “Black Swan author” Taleb
That goes back to something that Berkshire Hathaway #2 man Charlie Munger said about derivatives: “when you try to reach out and collect the money that’s backing up the derivatives the money vanishes.” If Taleb is right that’s because the guy with the money to hedge against the loss of the boat went down with the ship.
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