A bit more than a year ago, the great bull market swooned when a clutch of former Wall Street bankers and Nobel Prize winners made a series of terribly leveraged bets that turned horribly wrong.

The near-collapse of Long Term Capital Management opened a window on the clubby world of hedge funds and on a credit culture that allowed a small private organization to increase its balance-sheet leverage to a staggering 25:1, holding trading positions exceeding (on paper) $1 trillion.

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