Contents
| Copyright | |
| Foreword | |
| Introduction: The Siren Song of the Men Who Love to Win | |
| ONE | The Bets That Made Banking Sexy |
| Introduction to derivatives. Long-term actuarial approach versus the market approach to credit. Goldman Sachs sees opportunity in default swaps. The market approach vindicated by Enron’s bankruptcy. | |
| TWO | Going to the Mattresses |
| The advent of VAR and OTC derivatives. The collapse of Long-Term Capital Management (LTCM). A fatal flaw is exposed. The wrong lesson is learned. | |
| THREE | A Free Lunch . . . with Processed Food |
| A new market for collaterized debt obligations (CDOs). Risky investments, diversification, and the role of the ratings agencies. Barclays finds investors for its CDOs, only to fall out with them. | |
| FOUR | The Broken Heart ... |
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