Friday, Jul 06, 2007
CDOs - the dirty bomb due to explode?
BBC News: Are markets hurricane-proof?
Looks he's think what we're thinking - sorry to nick your line Michael Howard ( I feel dirty now)
Posted by nearly30 @ 12:17 PM (126 views) Add Comment
5 Comments
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1. nearly30 said...
What's wrong with my typing today - must have dyslexia!! That will teach me for posting at work.
Interesting article - looks like he's been reading Money Week too!!
2. bidin'matime said...
Good article. I fear that he may be right - derivatives could be the new factor this time round that will make the difference between an ordinary crash and a disaster.
I had to laugh at the comment (No.1) at the bottom of the page, though...
3. inbreda said...
"How likely is such a market meltdown? Not huge, according to Thomas Huertas, a sort of lifeguard of the banking system at the City watchdog, the Financial Services Authority. He told me that the FSA is encouraging banks to simulate the effects of a massive markets shock – the financial equivalent, say, of a dirty bomb in London – to see whether they would survive."
And if the simulation says "DOOM!!" how many of the aforementioned banks will tell their shareholders?
"Dear shareholders, we don't want you to worry or anything, but..."
4. Philld said...
The stock market seems to be completely ignorant of these warnings once again, its all based on sentiment and so far no one gives a monkeys about all the warnings. I know I have been waiting for the crash for almost 6 months now and it has not come, only one or two day pullbacks followed by rapid return to the prices the market dropped from. It's infuriating but this is what will most likely happen - it will all get spun as a positive thing or swept under the carpet and business as usual.
5. japanese uncle said...
Inbreda is spot on:
If any risk management system was at work at all in the banks, how could they neglect to scrutinize the mehanism of the CDO before taking on them in their portfolio.
Uetter rubbish!