So for those of us that fell victim to that awful alternatives reading in Level 3 for swaps, remember the reading on how enron used the banking relationship with chase and the spv mahonia for commodity swaps trading and essentially engage in off balance sheet financing? The trades were structured so that all the spot and fwd payments netted but one, and one prepaid foward so that they they were left with what turned out to be a fixed rate loan?
I keep thinking when looking at the derivatives line items for all these U.S. megacap and european banks, how much do you want to bet that this is what they are involved in, particularly in light of the recent headline “trading losses” for one notorious bank… trying not to use names here because it’s illegal to yell fire in a crowded stairwell… but…
I don’t know man… it’s not paranoia if “they” really are out to get you…