Template:SIV - FWMD

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Financial Weapons of Mass Destruction®



SIV


You give me that “Duration-My-Mismatch” crap, you can cram it your ass.


Docs Fund constitutions, prospectuses, commercial paper programmes, IMAs, subscription agreements, redemption gates: documentation galore, though none of it makes a damn of difference when the market won’t roll your paper. 7
Amendability Nope. It’s CP. If you don’t like it, don’t roll it. 0
Collateral Yeah well here’s the problem. Portfolios of mortgages. Secured, collateralised, diversified... and as illiquid as hell. Extra points for looking safer than it was. 8
Transferability Some, in theory, but it is CP. It redeems in a month. Why transfer it? Just let it roll off. 5
Leverage Not levered, as such, but a means of providing leverage. When you most want your money back, fast, you are least likely to get it. 8
Fright-o-meter Before 2007: We have allocated risk to those in the market best placed to bear it. After: ARMAGEDDON. 10