How Wall Street Wins Its No-Lose Trades

Jon Economy, Fiscal Policies, Government, Market Commentary

The madness of the manipulation machinery on Wall Street knows no bounds.
Remember credit default swaps (CDS)? They’re the risky financial derivatives traded among Federal Deposit Insurance Corp. (FDIC)-insured banks that, during the 2007-2008 financial crisis, took down Lehman Bros. and almost bankrupted giant insurer AIG Inc. (NYSE: AIG).
Well, they never went away. And now they’re making a comeback, and Wall Street is using them in ever more maniacal ways.
They’re back partly because the recently passed federal spending bill reversed a Dodd-Frank rule that said big gambling banks had to separate CDS into units not guaranteed by the FDIC (aka taxpayers).
While I may come back to that, I’m not writing about Congress’ latest gift to Wall Street today.
Today, I’m going to show you how Wall Street manipulators are using CDS and a false front of ‘activism’ to make huge profits from troubled companies – and why that’s becoming routine.

This post was published at Wall Street Examiner by Shah Gilani, courtesy of Money Morning – December 31, 2014.