Tuesday, Jul 24, 2007
The skydiving hedge funds just pulled the CDO rip-chord and nothing came out but confetti.
Information Clearing House: Trouble in Hedgistan
Y’see, the hedge fund industry is based on the bizarre notion that one does not have to produce anything of value to make boatloads of money. You don’t even need assets any more---just a risky loan that can be transformed into an investment grade security through the magic of “securitization” a sprinkling of Wall Street snake oil.
It’s like taking shards of bottle-glass and selling it as the Hope Diamond. Who’s gonna notice?
The only catch is that--now that these toxic CDOs are going to auction--there are no bids. That’s a bad thing.
“No bids” means that $1.4 trillion of shaky investments have no discernable market-value. The CDOs were graded “mark to model” which translates into “mark to fantasy”. It means that the investment bankers and hedge fund managers got together over Martinis
1 Comment
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1. dohousescrashinthewoods said...
wasn't this on "The Market Oracle" the other day?
http://www.housepricecrash.co.uk/newsblog/2007/07/blog-at-last-an-explanation-for-the-uneducated-5500.php