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SUPER SENIOR….Looking for more financial geekery? Sure you are! The other day I asked Felix Salmon to explain super senior tranches for us, and today he obliges. It’s too complicated to excerpt, but the nickel version is that it became yet another way for banks to increase their exposure to subprime loans by creating a synthetic version of the subprime market that was even bigger than the original. So instead of merely idiotically missing the housing bubble and losing lots of money on supposedly safe subprime-backed CDOs, they idiotically doubled (tripled? quadrupled? who knows) their bet by creating lots of synthetic subprime CDOs and then keeping them on their own books instead of selling them off. When the crash came, then, they lost money on both the real stuff and the synthetic stuff.

The full story is here. Enjoy!

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BEFORE YOU CLICK AWAY!

“Lying.” “Disgusting.” “Scum.” “Slime.” “Corrupt.” “Enemy of the people.” Donald Trump has always made clear what he thinks of journalists. And it’s plain now that his administration intends to do everything it can to stop journalists from reporting things they don’t like—which is most things that are true.

No one gets to tell Mother Jones what to publish or not publish, because no one owns our fiercely independent newsroom. But that also means we need to directly raise the resources it takes to keep our journalism alive. There’s only one way for that to happen, and it’s readers like you stepping up. Please help with a donation today if you can—even a few bucks will make a real difference. A monthly gift would be incredible.

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