Danny Schechter - ColdType

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how this worked: “Well, if you were going to be in the investment
world, and you’re a good investor the best way to make
money was to have a hedge fund because you get compensated
much higher. Hedge funds were being paid 1% of the assets
and 20% of the profits in those days. So obviously that was the
best way to make money if you were any good at it.”
Rogers (with a partner named George Soros) started a fund
because it was the thing to do, explaining, “A hedge fund is
someone who buys things and at the same time hedges himself
by selling short. The problem is, most people on the street don’t
understand selling short.”
Terms like “selling short,” “collateralized debt obligation”
and “credit default swap” were soon everywhere but not really
understood outside the financial world. Inside the world of
hedge funds, each boasted about the superiority of its own
super-secret proprietary investment algorithms.
They attempted to take the risk out of investing by putting
large amounts of money in “side bets.” While traditional
investments grow the “real economy” by providing companies
with money to hire workers and produce products and services,
Wall Street began putting more money into bets on the
market than were being placed in the actual market itself.
The side bet that finally blew up the economy was one of
those complicated financial instruments, called a “credit derivative.”
Someone wishing to protect himself on a risky investment
would pay regular premiums to a firm that would then
agree to insure the investor if a loss were to occur.
An insurance policy on an investment is a smart idea.
Chances are you’ve taken one out on your house – basic coverage
against fire or lightning damage depending on where you
live, perhaps flood, too. But now imagine that you could take
out insurance on someone else’s house, and you were permitted
to take out multiple policies.
In 2005, as I show in my film, written with Ray Nowosielsti,