…tranches of all CDOs. I’m not sure I can present even the simplest model in plain ascii. Also the model is very simple and you will have to trust me…

…some are used to share risk, and might actually be socially useful. A very short list of the financial innovations and their purposes follows after the jump CDO. Why pool…

…written. One way in which structured finance almost destroyed the world economy was very close to this but not so very very extreme. CDO designers and raters assumed that they…

…obliged to supply them with plenty of fish. OK an example. “The RMBS based CDO market became very illiquid in 2008.” This sounds like a safe claim. The fact is…

…very irrational investor would think he was getting something for nothing by buying a high yielding AAA rated CDO and assuming that it is as safe as an AAA rated…

…wealth in equal proportions among different investments. Market clearling implies that each investor owns an equal share of the senior, mezzanine and equity tranches of each CDO. There is no…

…down AIG. They’re completely unrelated issues. AIG failed because of CDS it had written on CDOs and ABS. The protection buyer in all of those contracts owned the underlying CDO…

…(collateralized parking meter obligation), puts the super-senior tranche into an off-balance-sheet vehicle, hedges the rest via a CDS-backed synthetic CDO, and then resells the whole thing within 12 months to…

…the housing bubble, MBS, CDO ride. I also wonder whether the acronym for the plural should be CDS or CDSs or even CDSes. I’m glad to see I’m not the…

Robert Waldmann reads Eric Dash and Julie Creswell who argue that Citibank took insane risks holding CDOs on its books, because of a failure of the fixed incomes risk management…