Debt securitization compounded risk instead of dispersing it.

Evidence

Having internalised this belief they were able to internalise another: that prudence was for wimps and that smart people, like themselves, were actually giving capitalism a helpful boost. But by producing more and more debt, splicing it up in smaller and smaller pieces, and dispersing it across the planet, they were not minimising the risk, they were compounding it. Ruin loomed large over the horizon but financiers were simply unable to imagine that all these tiny pieces of debt, on which the West’s financial system rested, could crash in unison. — Yanis Varoufakis, Technofeudalism, 182

Categorization

• XREF: connects to: Securitization let bankers profit while dispersing loan default risk to distant buyers. — Yanis Varoufakis, Technofeudalism: What Killed Capitalism, 181; Loan securitization concentrated risk rather than eliminating it. — Mark Blyth, Austerity: The History of a Dangerous…, 80; Dispersing debt across the planet compounded rather than minimized risk — Yanis Varoufakis, Technofeudalism: What Killed Capitalism, 182 (+6 more)

Broader Connections

• Loan securitization concentrated risk rather than eliminating it. #corroborates (0.98) — Mark Blyth, Austerity, 80
• Dispersing debt across the planet compounded rather than minimized risk #corroborates (0.95) — Yanis Varoufakis, Technofeudalism, 182
• Securitization made bankers believe dispersion minimized risk #expands (0.90) — Yanis Varoufakis, Technofeudalism, 181
• Securitization names a mindset that abandons actual security for risk-juggling virtuosity #expands (0.85) — Max Haiven, Cultures of Financialization, 258
• Derivatives inverted from insurance into engines that increase volatility exposure. #corroborates (0.85) — Aris Komporozos-Athanasiou, Speculative Communities, 91
• Hedging against one default type can worsen losses when a different form materializes #exemplifies (0.75) — Donald MacKenzie, An Engine, Not a Camera, 1036
• Derivatives do not reflect risk but actively produce contingencies and value #expands (0.75) — Aris Komporozos-Athanasiou, Speculative Communities, 390
• Portfolio insurance designed to limit losses can amplify market volatility. #exemplifies (0.72) — Shapiro, Susan P., The Social Control of Impersonal Trust, 144