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  • oracle_of_yomama oracle_of_yomama Mar 9, 2009 11:03 AM Flag

    Market to Market Article

    The Seeking Alpha article describes how hedge funds short the indices on which marks to market of mortgage securities are based, which increases the write-downs banks are forced to take, thereby enriching the hedge funds who have shorted the banks' stocks and gone long on the banks' credit default swaps in parallel.

    Once the Obama administration begins to understand how the mechanics of this work, they will surely take steps to spoil that party. Given Obama's predilection for following in FDR's footsteps, he may take comfort in suspending mark to market with the knowledge that FDR did the same thing when faced with similar circumstances.

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