The Street is tailoring government bonds to fit the winning mortgage market strategy, right down to selling shorts to investors who are gambling right now that governments won’t be able to meet both their budgets and pay their loans off, given the crippling economy that still hasn’t recovered from the subprime mortgage crash. The idea of course is not to repeat the mistakes and scams that plagued that other market.
Investment houses, some of which many people will recognize from the “Too Big to Fail” hearings on Capital Hill: Bank of America Merrill Lynch, Citigroup, Goldman Sachs Group, JP Morgan Chase and Morgan Stanley, are hard at work conforming muni bond contracts in order to trade them in groups called tranches. Sound familiar?
via Wall Street to trade tax dollars like it did your mortgage, Maureen Nevin Duffy, NewJerseyNewsroom.com. Old to some but new to me.