Full circle financial alchemy

Because reckless players and institutions in the financial sector were not allowed their just desserts of bankruptcy, prosecution and public shame in the last cycle, we are en route for a round trip back to financial pain for the already crippled real economy. See the whole article: Wall St. Redux: arcane names hiding big risk

“The alchemists of Wall Street are at it again.

The banks that created risky amalgams of mortgages and loans during the boom — the kind that went so wrong during the bust — are busily reviving the same types of investments that many thought were gone for good. Once more, arcane-sounding financial products like collateralized debt obligations are being minted on Wall Street.

…the revival is welcome news for Wall Street banks and structured finance specialists. In 2008 and 2009, some banks eliminated their entire teams, assuming they would not be needed again. But last year, revenue from securitizations was up 68 percent, according to the data company Coalition.

“Literally we thought the business was gone,” said Jeanne E. Branthover, a Wall Street recruiter. “The surprise is that this is a skill that banks are looking for again.”

No surprise here…nor should anyone be taken unawares in the next down leg of the on-going financial crisis. Sadly, most will be.

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