Congressman Ackerman and Credit Defaul Swaps

Congressman Ackerman described what a Credit Default Swap is today. I think it is one of the best descriptions that almost anyone can get.

Paraphrased: There are these two guys in a rowboat and a really bad storm comes up and there are sharks all around. The first guy says, "I'm scared!" and the second guy says, "I'll sell you an insurance policy!"

Obviously, the second guy might get a payment from the first guy and be happy about that but in actuality the highest likelihood is that neither of them will survive. This describes just how bad Credit Default Swaps are which are the most like Hedge funds which are probably one of the most risky investments one can make with money outside of getting married.(marriage is 50-50 chance of divorce and possible financial insolvency). If you are in a hedge fund during bad times you have a 90% chance of losing everything even though during good times you might make a fortune. So, hedge funds are the most like a roulette wheel in Las Vegas in good times. Whereas, Credit Default swaps in bad times only destroy everyone in the worlds economy like now!

I think Barney Madoff was running his Ponzi scheme based upon a hedge fund model.

Since hedge funds and credit default swaps are completely unregulated, they both need to be regulated or made illegal, one or the other.