Wanna See What Kind of Crap Is In Some CDO's?

Discussion in 'Economics' started by PAPA ROACH, Jan 8, 2008.

  1. This is some mind boggling shit here my friend. This whole read is quite good actually but pay attention to the employment number methodology and the CDO created by Merrill, fascinating.

    http://www.frontlinethoughts.com/pdf/mwo010408.pdf

    "“For Norma, [the manager] assembled $1.5 billion in investments. Most were not
    actual securities, but derivatives linked to triple-B-rated mortgage securities. Called
    credit default swaps, these derivatives worked like insurance policies on subprime
    residential mortgage-backed securities or on the CDOs that held them"

    They made CDO's that had no real hard assett's??? WTF?? packaged a derivative into a derivative and sold that. Run for the hills fast.
     
  2. It is because the Global Alpha Hedge Fund is the customers' money, while the hedging at Goldman's against the mortgage market is their own money.

    "So where are the customers' yachts?"
     
  3. Ah excellent point! I read about that before, just needed a refresher.
     
  4. It is because the Global Alpha Hedge Fund is the customers' money, while the hedging at Goldman's against the mortgage market is their own money.

    "So where are the customers' yachts?"


    A straight up fleecing
     
  5. hehe..


    here's the goldman trading strategy:

    1) Start with 20B

    2) Buy X asset in book A
    3) Short X asset in book B

    4) At the end of the Q, when its reporting time, the profitable book is owned by GS. The losing asset is in the GS hedge fund.

    Very simple. Thats how you never lose.