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GM31: The Art of Volatility Investing ft. Dave Dredge

Top Traders Unplugged

CHAPTER

The Fed Is the Least of the Problem

The banking system and the failings, the flaws in their sharp world regulatory structure, Basel 1, that allowed them to tranche and construct through derivative innovation triple A super senior tranches of subprime CDOs. And so a very small change in the correlation of house prices from what was implied to create that triple A superSenior tranche wiped out all of the capital in the global banking system. The Fed is in arguably one of the better circumstances in the world of central bankers but they need to walk this tightrope where they can't raise rates too much or it will blow up fixed income markets.

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