The Recapitulator reads that Morgan and Goldman profited mightily from Amranths downfall AND WAS LIKELY ON THE OTHER SIDE OF MANY OF AMARANTH'S POSITIONS. We have written about this front-running practice before, and astute readers will gather many parallels linking this type of behavior to the burgeoning reinsurance market that many (most?) of the large Hedge Fund players are entering into.
Again, with tepid waters and no sharks, diving into a market (reinsurance) that one is NOT an "expert" in is preferable to navigating waters that offer a 100% probability of "informational leakage" (straight to the prop desks of the your prime broker!)
Record profits at the large investment banks indeed...record PRIME BROKERAGE profits. One does not need an advanced degree in statistical analysis to posit some reasonable causes for this correlation.