Thursday, April 17, 2008

CDOs --the real black hole of uncertainty

I admit I'm no genius, but the constant (re)fessing up from the biggest (supposedly smartest) financial institutions about how much money they REALLY lost in the whole subprime mess is like watching a blind man throw darts (no offense to the visually impaired intended). Aren't these guys supposed to be financial geniuses? Don't they have accounting departments that keep track of the P&L. Don't they have massive server farms with nano-second data retrieval?
Just a few thoughts running through my feeble mind whenever I hear the latest loss projections. . . which is exactly what they are. . . guesstimates. And then I read a couple of articles on CDOs today and all of a sudden a (dim) light went on and I understood a lot of the problem. Basically, they've "mis-spoke" (been lying through their teeth all along) and now they're trying to figure out how to restate what they should have said in the first place. When you've got an hour or two and you don't mind breaking into a cold sweat, delve into some of the Seeking Alpha Search results here:
For a more generic view of CDOs check here:
I suspect we're going to hear a lot more about CDOs in the near future as some of the biggest names in the financial sector look into the abyss. A sector fraught with danger.
Also see this little gem, via Cucca.

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