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Economic articles/shows detailing CDS mess

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  • #1

    Economic articles/shows detailing CDS mess

    Just an update. There is a newish Fresh Air podcast on the CDS mess. It is an interview with the same finance reporter in previous broadcasts - this time the subject is how speculative CDS deals were converted in to CDOs by Merrill Lynch - and contributed to their downfall.

    http://www.npr.org/templates/story/s...950757&ps=cprs

    Also, here is a great article about the Wall Street mess by the author of Liar's Poker (who thought Wall Street would implode years ago!)

    http://www.portfolio.com/news-market...?print=true%22

    Both suggest a lack of higher thinking in the rooms of power. (I'm still amazed that anyone thought this was a "risk-free" idea.)
    Angie
    Gyn-Onc fellowship survivor - 10 years out of the training years; reluctant suburbanite
    Mom to DS (18) and DD (15) (and many many pets)

    "Where are we going - and what am I doing in this handbasket?"
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  • #2
    Re: Economic articles/shows detailing CDS mess

    This is my favorite explanation of the sub-prime market and CDOs:
    http://docs.google.com/TeamPresent?doci ... true&pli=1

    (warning: naughty words)

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    • #3
      Re: Economic articles/shows detailing CDS mess

      I haven't seen that! It's awesome!

      I'm still trying to wrap my head around the "synthetic CDO" made up of CDS deals made on bad loans. I can't figure out how you turn "insurance" deals on mortgage bonds you don't have into something you can sell. I guess you just buy the promise of payment if it goes bad, package that and slice it in to tranches?

      *insert head scratching emoticon*

      This stuff is making my head explode.

      *insert head exploding emoticon*

      It is only a small comfort that even the econ geniuses that thought this stuff up also don't get it now that it is unraveling.
      Angie
      Gyn-Onc fellowship survivor - 10 years out of the training years; reluctant suburbanite
      Mom to DS (18) and DD (15) (and many many pets)

      "Where are we going - and what am I doing in this handbasket?"

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      • #4
        Re: Economic articles/shows detailing CDS mess

        Originally posted by Sheherezade
        . . . (I'm still amazed that anyone thought this was a "risk-free" idea.)
        Did they really think that this was a "risk-free" proposition, or simply a "risk-delayed" and then gambled, thinking that it was worth the far-removed-in-time risk?

        I just remember having a conversation with a couple of other BK attorneys about five years ago. They were sophisticated, 25+ year practitioners, who'd lived through the 80s bust and the flying 90s and the net bubble burst. They SO predicted this exact thing. At the time, I thought that, yeah, that could happen, but who would let it get that far? I must have looked like such a naive kid at the time.

        I feel a lot older now...

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        • #5
          Re: Economic articles/shows detailing CDS mess

          I guess I'm just referring to the creation of the CDS as a way to eliminate risk in the bond market. :huh: Of course, once they discovered they could make money with the deals, I suppose the "risk" business became minor.
          Angie
          Gyn-Onc fellowship survivor - 10 years out of the training years; reluctant suburbanite
          Mom to DS (18) and DD (15) (and many many pets)

          "Where are we going - and what am I doing in this handbasket?"

          Comment

          • #6
            Re: Economic articles/shows detailing CDS mess

            Originally posted by Sheherezade
            I guess I'm just referring to the creation of the CDS as a way to eliminate risk in the bond market. :huh: Of course, once they discovered they could make money with the deals, I suppose the "risk" business became minor.
            Oh, I'm sorry. I misunderstood.

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