Avik’s Ruminations

Musings on technology and life by Avik Sengupta

All those arrows

without comments

A very cogent analysis of the CDO industry over at the London Review of Books, based on Fool’s Gold: How Unrestrained Greed Corrupted a Dream, Shattered Global Markets and Unleashed a Catastrophe, the new book by Gillian Trent, the capital markets editor of the Financial Times.

The primary premise being, the first use of the CDO was to package up a wide variety of corporate debt with a reasonably low correlation for risk of default. The use of similar low correlation numbers for CDO’s backed by MBS’ however was grossly incorrect. A must read!

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June 22nd, 2009 at 10:51 pm

Posted in Finance