Category: Subprime Crisis

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Credit-ratings-agencies-D-008

S&P sued. Conspiracy or idiocy?

Link: How has it taken 5 years to get to this point? The US government, after “a fallout in talks”, has notified Standard & Poors that it intends to sue them over their standardly poor (in that they were useless) ratings of CDOs and RMBSs in 2007. Of course, the catch in all of this is that the US is […]

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chess

Greek CDS Exposure: Proving the ISDA and Bloomberg Wrong

According to numerous news reports, the net exposure arising as a result of Friday’s decision to declare the activation of Greek CACs a credit-default event amounts to approximately $3.16 billion (assuming that the bonds achieve no value at the ISDA auction on March 19). Where is the data coming from? On the same day that […]

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monopoly

The Subprime Mortgage Crisis

Alright, before I begin, I’d like to make the following observations: Some of the concepts/instruments I am going to mention have been explained more fully in a number of previous posts: Mortgages (see here) Mortgage-Backed Securities (MBS) (see here) Collateralised Debt Obligations (CDO) (see here) Ratings Agencies (see here) The content is based on a […]

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monopoly1

Collateralised Debt Obligations. Robligations?

So, in my last article post on this topic, I talked about Mortgage-Backed Securities AKA Collateralised Mortgage Obligations (click here). The key points: A bank/mortgage-lender builds a pool of mortgages. It repackages the cash-flows that it will receive from the mortgage pool, and sells them to investors as Mortgage-Backed Securities (MBSs). The MBSs are split […]

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contagion

Contagion. And Why Greece is Contagious

Austerity and debt monetisation

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Credit-Default Swaps: the real issue with the Greek Debt Crisis

Recently, the Universe smiled at me. I walked into a small second-hand bookstore, and found a signed, annotated, mint condition, first edition copy of Nelson Mandela’s autobiography “Long Walk to Freedom”. I rushed off to change the limit on my bank-card, and half an hour later, it was mine. And really, I cannot deny that […]

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