Comments on: The Continuing Deterioration of the Collateralized Debt Obligation Market http://www.nakedcapitalism.com/2007/11/continuing-deterioration-of.html Sun, 22 Nov 2009 16:18:41 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Anonymous http://www.nakedcapitalism.com/2007/11/continuing-deterioration-of.html#comment-1366 Anonymous Fri, 02 Nov 2007 18:14:00 +0000 http://www.nakedcapitalism.com/2007/11/the-continuing-deterioration-of-the-collateralized-debt-obligation-market/#comment-1366 As usual banks are so inspired that they all do the same and will end up with a « zero of conduit »<br/>That means they all have their conduits and they all have questionable balance sheets and income statements (HSBC has 32 Billion USD managed under the same scheme) As usual banks are so inspired that they all do the same and will end up with a « zero of conduit »
That means they all have their conduits and they all have questionable balance sheets and income statements (HSBC has 32 Billion USD managed under the same scheme)

]]> By: bob http://www.nakedcapitalism.com/2007/11/continuing-deterioration-of.html#comment-1362 bob Fri, 02 Nov 2007 12:27:00 +0000 http://www.nakedcapitalism.com/2007/11/the-continuing-deterioration-of-the-collateralized-debt-obligation-market/#comment-1362 Oops, that should have been: "I don't see any reason <b>not</b> to assume that most of the 2005 - 2007 stuff was similar garbage. <b>Not to mention bigs chunks of everything else since the start of the decade.</b>" Oops, that should have been: “I don’t see any reason not to assume that most of the 2005 – 2007 stuff was similar garbage. Not to mention bigs chunks of everything else since the start of the decade.“

]]> By: bob http://www.nakedcapitalism.com/2007/11/continuing-deterioration-of.html#comment-1361 bob Fri, 02 Nov 2007 12:06:00 +0000 http://www.nakedcapitalism.com/2007/11/the-continuing-deterioration-of-the-collateralized-debt-obligation-market/#comment-1361 Yves,<br/><br/>First, congrats on the interview at Blown Mortgage - it was good to hear you.<br/><br/>As far as the CDOs, I think they are all crap. If the examples Tanta used in <a HREF="http://calculatedrisk.blogspot.com/2007/05/mbs-for-ubernerds-iii-credit-risk.html" REL="nofollow"> http://calculatedrisk.blogspot.com/2007/05/mbs-for-ubernerds-iii-credit-risk.html </a> and <a HREF="http://calculatedrisk.blogspot.com/2007/07/leverage-ratings-and-forced-unwind.html" REL="nofollow"> http://calculatedrisk.blogspot.com/2007/07/leverage-ratings-and-forced-unwind.html </a> are typical, the BBB tranches of MBS are only thinly protected, and are complete junk to begin with. (This "credit enhancement" stuff is just smoke and mirrors based on wildly low default assumnptions.) In her example, only 7% of the MBS has to go south before the CDO based on it is totally wiped out. <br/><br/>Given all the news lately, I don't see any reason to assum that at least most of the 2005 - 2007 stuff was similar garbage. I'm not an investor or mortgage banker, however. Yves,

First, congrats on the interview at Blown Mortgage – it was good to hear you.

As far as the CDOs, I think they are all crap. If the examples Tanta used in http://calculatedrisk.blogspot.com/2007/05/mbs-for-ubernerds-iii-credit-risk.html and http://calculatedrisk.blogspot.com/2007/07/leverage-ratings-and-forced-unwind.html are typical, the BBB tranches of MBS are only thinly protected, and are complete junk to begin with. (This “credit enhancement” stuff is just smoke and mirrors based on wildly low default assumnptions.) In her example, only 7% of the MBS has to go south before the CDO based on it is totally wiped out.

Given all the news lately, I don’t see any reason to assum that at least most of the 2005 – 2007 stuff was similar garbage. I’m not an investor or mortgage banker, however.

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