Having been employed in the securities industry for 41 years, I know something about markets.

Basically, the way it works is that an owner of a security (or debt instrument) gets convinced the price of what they own is going lower. They don't like what's happening for some reason, so they sell to someone else. Whomever they sell to has a different opinion. They think the price is going higher.

Someone always turns out to be wrong and there's nothing that can be done about it. If the price goes down after the trade, the seller is right and the buyer is wrong. If the price goes up, vice versa. Simple.

Free markets don't make everyone happy. Once in a while you hear people that turned out to be wrong whining and complaining. They say they were "victimized" by whoever it was on the other side of the trade. They "didn't really mean to" sell so low, or buy so high. This is ridiculous. Of course they "meant" to do it when they did it. They just ended up being wrong. Now they regret it. So what else is new? Happens every day in exchanges and markets throughout the world.

I was told, and then read, that the Church of Scientology is "accusing" Robert Minton and Jeffery Schmidt of "stealing" from the people on the other side of a trade. Minton and Schmidt were the buyers and someone (we don't know who exactly), who had lost a whole lot of equity on their loans to Nigeria, were the sellers. The people that had lost figured they would lose even more if they didn't sell. They were pessimistic. Apparently they ended up believing Nigeria would default, and getting _something_ back was better than getting zilch. This means that Minton and Schmidt were the optimists. Minton and Schmidt had faith in Nigeria's ability to pay back on its loans. So they bought. They bought at a good time too.

You might be wondering, why didn't Nigeria's government buy their own debt back, since it was priced so low for a while, down at 10 cents on the dollar? For one thing, they didn't see the opportunity. It's just like the people that are buying into the stock market these days. Why didn't they buy back in 1982? You tell me. There was probably also a lack of money. If Nigeria can't make payments on its debt, how could they buy it? And since Nigeria's credit was so bad, no one would loan them the money. Would you loan someone money who's about to default on a big debt? I sure wouldn't.

Anyway, Minton and Schmidt bought the supposedly "bad" debt, and they turned out to be right. The price of Nigeria's debt had gone too low and was destined to go higher. Just like the stock market. The price went up and up. Finally, the Nigerian government started to wake up to the opportunity. They could buy their own debt back NOW and not have to pay back LATER. The buy side sure looks like a sweet deal in retrospect but it took the Nigerians some time to come by the funds and/or muster the confidence to take advantage of it. Minton and Schmidt filled in for them while they were thinking about it.

Who are the big losers in Nigerian debt? The people that loaned Nigeria the money in the first place. They lost, and big. 90% loss. 100 percent down to 10 percent. Very sad. The poor dolts on the other side of the trade. My heart goes out to them.

Who were the big winners? Nigeria, because they paid back their debt on the cheap, at 45 cents on the dollar (meaning Nigeria made 55 cents profit per dollar of debt). And Minton and Schmidt win for putting up the money and believing in Nigeria when even the Nigerians themselves, for some reason, just couldn't.

That's the way markets work. To the degree you're wrong, you lose. To the degree you're right, you win. No one forces you to do what you do.

In my opinion, the Church of Scientology should be congratulating the Nigerian government, Minton, and Schmidt for being winners in the market game. Minton and Schmidt made 35 cents per dollar of debt. Nigeria made 55. They're both winners and Nigeria is the biggest winner of all.

So what gives?