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16 years ago

Excellent article, Rich. It
Excellent article, Rich. It provides a necessary introduction to the CDO sector’s impact on housing finance. I hope it doesn’t get lost in the flood of news this week.

16 years ago

Thanks Rich for a very
Thanks Rich for a very clear, well written
description of how these financial instruments work.

Since we are nearing the 4th of July I would like
to relate this story to illustrate a point:

In the early 1960’s I was over at a friends house
in North Long Beach for the 4th. His folks had
just purchased a “Uncle Sam Super Jumbo Family”
fireworks assortment.

Just as it got dark and we started to light off the
fireworks, someone decided to drop a hot sparkler
in the box.

Suddenly a firework in the box lit off. Then another.
Then another. The next few minutes of time are
forever welded in my memory.

Needless to say, the entire box was destroyed. (Along
with the family picnic table in the backyard).

My question is this: Does anyone fully understand
what’s inside the MBS/CDO fireworks assortment?
Do we even know the dimensions of the size of the box?
Is it even possible to begin to predict in which order
the finanical fireworks will light off?

My limited understanding of these markets indicates than
trillions of dollars are at risk. Is that possible?

Thanks for a great site!

16 years ago
Reply to  Anonymous

Here is an article from MSN
Here is an article from MSN today that may answer some of your questions octal77, and is directly in line with what Rich says.