Collateralised debt obligation — three words which taken separately seem harmless and rather nice, but when put together convoke Satan and all his hellish angels of leverage. when bundled together and sliced up, make a CDO squared which really is the stuff of nightmares.
Top Trumps®Financial Weapons of Mass Destruction®
CDO
“Bowie started it. Lehman finished it. No-one enjoyed it.”
| Docs |
Full blown 144A standalone. Hundreds of thousands of little words, and not one of them will help you. |
9
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| Amendability |
The manager might make some portfolio substitutions, but who do you think that will help? |
8
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| Collateral |
Ninja collateral. Literally. |
7
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| Transferability |
Yeah but no. Made worse because they look so transferable. |
7
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| Leverage |
Funding-wise, no. Money down up front. Risk wise? Hell yeah. |
7
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| Fright-o-meter |
But the ratings! The ratings! |
8
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Index: Click ᐅ to expand:
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See also
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