CDO's - the next timebomb? - Aussie Stock Forums

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  1. #1

    Default CDO's - the next timebomb?

    CDO's seem like the subject swept under the carpet. From my understanding, a lot of local councils are exposed. Anyone have more of an idea about this subject. Not a whole lot of info on AUS exposure or effects.

    I've seen one or two articles on the net(from links supplied here). I remember another thread about CDO's but couldn't find it.

  2. #2

    Default Re: CDO's - the next timebomb?


    They seem to be discussed every now and then as 'debt weapons of mass destruction' along with other kinds of derivatives - however, I think the journalists just dont understand them enough to give them coverage.

    Oh well... bankers never knew them either

  3. #3

    Default Re: CDO's - the next timebomb?

    Other videos can be found on the bionicturtledotcom channel, on youtube.

  4. #4

    Default Re: CDO's - the next timebomb?

    And here is the bad news about CDO's right now. And I think we are up to 7 defaults/partial defaults out of nine by the way.


  5. #5

    Default Re: CDO's - the next timebomb?

    Great links thanks.

  6. #6

    Default Re: CDO's - the next timebomb?

    Thanks for the links electronic, your other link sparked my interest again. Can't help but to wonder what will happen. You hear bits and pieces about CDO's, a bit like the whole subprime issue a few years back when the market wasn't really watching. All of a sudden the masses that didnít prepare get caught out. I'll have to watch the vids when I get time. Well worth watching it unfold with a close eye.

  7. #7

    Default Re: CDO's - the next timebomb?

    Nice videos, except he does not explain why it will be a "timebomb" so I will give it a go.

    (1) Insurance does not make the risk go away, the risk is your premium cost. The cost of the insurance is always higher than the risk you are insuring for simply because every party in the chain takes a piece of the pie. But how did they make those enormous profits from insuring and reselling packaged up paper? Since there is no free lunch, the only way this is possible is if they lied about the risk.

    (2) CDS have been written up without sound capital behind them. Trillions of dollars of CDS are backed by nothing but the fraudulent paper from (1). There is simply no capacity to pay out the insurance in the event of a mass default but the derivative market operates on the assumption that the insurance is sound.

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