Someone, somewhere, has lost a lot of money. As the subprime mortgage crisis in the U.S. spread through the credit and equity markets last month, hedge fund managers watched price movements with a concern bordering on obsession. Volatility skyrocketed as investors realized that a whole slew of collateralized debt obligations, or CDOs, issued by major investment banks were largely worthless, their ratings rendered null and void by the rapidly growing number of subprime mortgage defaults.
