Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Synthetic CDOs - Money for Nothin? Until Markets Collapse!
Old 12-28-2008, 06:46 AM   #1
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2007
Posts: 5,072
Synthetic CDOs - Money for Nothin? Until Markets Collapse!

Oops the title should read Synthetic CDOs.

Looks like many signed up that should not have done so. The problem is that these people were taking risks with other people's money on bets they knew nothing about.

Quote:
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...
Insurance Deals Spread Pain of U.S. Defaults World-Wide - WSJ.com
__________________

__________________
chinaco is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 12-28-2008, 09:01 AM   #2
Administrator
W2R's Avatar
 
Join Date: Jan 2007
Location: New Orleans
Posts: 38,860
Quote:
Originally Posted by chinaco View Post
Oops the title should read Synthetic CDOs.
OK, done...
__________________

__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities.

- - H. Melville, 1851
W2R is offline   Reply With Quote
Old 12-29-2008, 08:09 AM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2007
Posts: 5,072
Nice tutorial on sub-prime synthetic CDO.

There are a variety of them.

The group that produced this tutorial has a nice web site. Many similar tutorials are on Youtube.

__________________
chinaco is offline   Reply With Quote
Old 12-29-2008, 09:58 AM   #4
Thinks s/he gets paid by the post
 
Join Date: Oct 2006
Posts: 3,813
Thanks for the post. It fills in facts where I had only had impressions. (The link in the OP sent me to a "subscriber only" WSJ page. I found a copy posted here: Australians Lose Millions In Bernie Madoff Scandal In... In spite of the link title, the text was about this CDO deal. )

In my, non-specialist, language, I'd say that the investors in Australia were providing capital for an insurance company. If the company goes under, they lose their money. Of course, the "company" avoided typical insurance regulators.

This sentence is critical to me: "Nearly a quarter of the synthetic-CDO securities that started with investment-grade credit ratings from S&P have already been cut to junk, according to data from the rating firm."

I expect tha the investors were smply relying on S&P. In the absence of effective gov't regulation, the rating agencies had a lot of power.
__________________
Independent is online now   Reply With Quote
Reply

Tags
cds, financial crisis


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
You Ain't Seen Nothin' Yet camberiu FIRE and Money 3 10-29-2008 08:21 AM
Markets Close To Collapse boont FIRE and Money 5 09-25-2008 03:34 PM
National Australia Bank writes down 90% of US AAA CDOs ladelfina FIRE and Money 15 07-28-2008 01:45 PM
Money Markets Keyboard Ninja Young Dreamers 8 04-14-2008 11:52 AM
100% Synthetic oil - change frequency Sam Other topics 26 04-17-2007 02:55 PM

 

 
All times are GMT -6. The time now is 09:31 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.