Who the hell thinks this crap up?
Devious greedy people who know how to use leverage to term a stupid idea into a bonanze as long as nothing goes wrong too quickly before they can get out with billions in their pockets. The people betting on the downturn were not necessarily the bad actors here. It was the people selling the insurance, knowing they could never pay it, and prices that were way too low.
Someone like Phil Gramm.
Somebody who realizes that treasury hedges don’t always correlate to portfolio risk.
Henry Paulson, while at Goldman Sachs, was apparently involved, present with the creation of every type of derivative known to man....therefore, the most credentialed person to serve as US Treas Sec. The first hedge fund, in London, was estb by a Goldman Sachs person who went to London to begin the experiment ...the rest is history. Goldman Sachs is at the epicenter of the derivative world. Lehman later took on the mantle of having the greatest involvement with credit default swaps. All the bad stuff strangling the world was an American invention, augmented by all the central banks of the industrialized world jumping in.