Insurance Deals Spread Pain of U.S. Defaults World-Wide Article Slideshow Comments more in Asia » PARKES, Australia -- In this town of 10,000 in what Australians call "the bush," administrator Alan McCormack has a headache. The county council is poised to lose millions of dollars if more U.S. companies succumb to a deepening recession.
Ten thousand miles away, at New York investment firm ICP Capital, hedge-fund manager William Gahan is reaping big gains on Mr. McCormack's predicament.
The fortunes of the two men are connected through an investment known as a "synthetic collateralized debt obligation." Between 2005 and 2007, the Parkes local council put more than A$13.5 million ($9.3 million) of its savings into synthetic ...
