How derivitatives increase market efficiency. Several excellent points in this article.
After years of finger pointing for the housing bubble and credit crisis, from Washington to Wall Street and back, the upshot is this: a Securities and Exchange Commission complaint targeting one of the few people who realized the mortgage market would implode.
This is the surprising significance of the high-profile and complex complaint the agency filed earlier this month against Goldman Sachs for its work with hedge-fund trader John Paulson. The investment bank crafted securities that let him put his money where his analysis was, pointing to the housing boom as unsustainable.
One of the frequently asked questions about the housing bubble is why no one saw the problem until it blew up. The answer is that a few people did. Mr. Paulson, who was not charged in the SEC lawsuit, is chief among them.