[btilly]

You may be right. But if so, beware.

One of the problems in this arrangement is that the companies themselves don't want to encourage it. Therefore there is always going to be a trust issue of, "How do I know that you really can deliver this stock?"

Securitization allows people to get comfort of, "There may be some bad actors, but this is diversified enough that I'm sure that this slice of pie is safe." The problem with that is that now the people originating deals have little incentive to be careful. The people buying deals have no insight. And the people reporting on deals have interests more strongly aligned with issuers than purchasers. This conflict of interest can result in demand being met through ever more shady stuff being in quickly put together deals.

When that blows up, the entire sector will blow up at once. Like subprimes did in 2008. Or like the S&L crisis in the 1980s.

The phenomena is called control fraud. And it is a cycle that repeats in different asset classes. No matter how many times it happens, it will happen again due to the combination of people not learning from history and people's willingness to believe that they've figured out how to get rich.