Structured investment vehicle: Difference between revisions

Structured investment vehicle (view source)

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 This all only works, of course, as long as people remain prepared to buy your commercial paper when it rolls every month. In times of plenty, when markets are steady, they generally will, because a SIV will generally pay better interest than normal commercial paper issuers, because of the assets it invests in — but when, as it periodically does, the market blows up, no-one will want to buy your crappy CP when it rolls, backed as it is by second mortgages of fourth homes of Las Vegas strippers, and you will find yourself lacerated by shards of hot twisted metal in the pit of a very deep, very smoking, crater. This happened in 2008. The problem is called “duration mismatch”. It is one the crypto-world is re-discovering all by itself in 2022.
+===Role in [[Opco Boone]] adventures===
+An [[SIV]] is a utility transport vehicle that moves forward by acquiring momentum through a rapid [[subscription]]/[[redemption]] cycle. It effectively sucks liquidity out using the gravitational attraction of yield. It uses this almost guaranteed inflow to power its tactical asset allocation engines and manufactures its own tracks. Engineers managed to iron out the juddering/clattering sensation in its ordinary forward movement by shortening the tenor and increasing the yield on asset portfolios, but the vehicle still has a weakness in certain volatile climates especially situations where combatants can draw liquidity away from the vehicle.
 {{sa}}
 *[[FTX]]