Anna Katherine Barnett-Hart wrote a paper while a student at Harvard that Michael Lewis used as inspiration for his new book, The Big Short. Yes, she’s that good.
Clusterstock:
We read through it, and what’s great about it is the clear-eyed illustration of how the CDO market metastasized and turned into such an out-of-control monster.
So, they’ve provided [...]
Posts Tagged ‘CDO’
Leveraged debt and the current debt crisis
Image from NY Times article, Arcane Market Is Next to Face Big Credit Test, an article which is getting huge circulation among financial blogs as it is makes public to the world at large what the financial blogs have been saying for months, that the coming debt crunch could make subprime seem small.
Few Americans have [...]
Credit default swap losses may reach $250 billion
Bill Gross of giant bond management company PIMCO says losses on credit default swaps could reach $250 billion based on historical default rates.
To put that number in perspective, many Street estimates ascribe similar losses to subprime mortgages, a derivative category substantially distinct from CDS insurance.
With CDS, a bond issuer sells risk to the buyer who [...]
Norma hairballs
A CDO called Norma left ‘hairball of risk’;
Tailored by Merrill Lynch
The WSJ details how a CDO called Norma that sold $1.5 billion in securities to investors in March is now worth a fraction of that – assuming buyers existed for their toxic glop, and none do.
The article also has a hugely informative Flash animation [...]
Financial castles of sand
The Financial Times has a quite understandable, informative article about the collapsing shadow banking system and how it is impacting real banks and the financial world at large.
How crazy did it get?
Satyajit Das, an author and derivatives industry expert, cites an example where just $10m of real, unlevered hedge fund money supports an $850m mortgage-backed [...]
