Posts Tagged ‘CDO’

Consider this post in reference to the concept of derivatives.

I feel that if anyone wants to attempt any critique of the derivatives market in its entirety, one has to move past any continued emphasis on ‘casino capitalism’, as this is an oft repeated line which, whatever its merits or otherwise, has become an easy reply for those who favour such practices.

I believe one needs to concentrate on debunking the notion of risk management in order to effectively retort.

Many supporters of derivatives would rightly point to their use is not just to speculate with (as in Investment Banking), but as a valid means to manage risk, especially in Insurance, and it is this aspect which deserves further attention in my humble opinion

The above linked post brilliantly draws together the notion of colonising time as an integral commodity, matching any such physical asset, thereby shinning a much needed light on the important and neglected aspects of this discourse of, post colonialism and global racial financialisation.

Advertisements

Image result for The Big Short Poster

An excellent and well articulated movie which once again demonstrates the high ignorance shown by market participants, the “emperors clothes” mentality which authorities displayed and the falsehood by which many were duped into believing the boom would continue indefinitely. Contrarians would certainly be pleased with this

As the tag line says, “This is a true story”, its hard to believe but it really is!. Nothing else needs to be added showing the level impact the plain truth can have.

Interested viewers should also note that they can search the LEARN series of posts on this blog site for an easy to understand tutorial on many of the credit based products mentioned in this film.

Oscar-winning documentary by Charles Ferguson, narration by Matt Damon, on the causes, effects and most shockingly, the men who were responsible for one of the greatest recessions of all time. A powerful analysis of the crisis – some of the best material I have seen on this subject matter

Blame must be shared amongst a number of parties, but this film shows just how many of these ‘separate’ institutions are simply run by those from the same circle, who remain in and around the halls of power regardless of which party sits in office. The failings by regulators, boardroom executives, government and ratings agencies were not as genuine as has been made out, for we must understand that in this system, there is always someone benefiting whichever direction the trade goes – rise or fall, the opportunities to profit are endless….

http://www.filmsforaction.org/watch/inside_job_2010/

 

In the final part of this learning series, we explore Credit Default Swaps. The best way to understand these instruments is to equate them to insurance policies, for bonds and their risk of defaulting.

This post will cover topics related to what is and how a CDS works, CDS Indicies, Total Rate of Return Swaps and Exoctic CDS’s

Any feedback on this series is welcome

CDS

CDS Indexes

Exoctic CDS

Part 3 of 4, this week we look at the subject of how assets are used to create revenue streams, the process known as securitization. We also explore the field of so called exoctic instruments, looking at CDO/CFO/CLO product types.

This is another opportunity to understand the way instruments are structured in order to sell them on in a different legal form (re-packaged) for the purpose of achieving certain investor requirements of risk and return

Asset Backed Securities

Exoctic CDOs

In this second part of the LEARN: CREDIT PRODUCTS series, we will explore the topic of Synthetic CDOs, what they are and how they work, including their different uses and types.

As a general backdrop, it is worthwhile understanding ‘synthetic’ products, by their nature, they seek to replicate the properties of an underlying investment and therefore allow the investor to profit (or loose) without actually holding a position in a ‘real’ asset. Just one of the many concepts and varieties that allow the kind of financial alchemy that exists today – meaning anything can be CREATED as needed….(hence islamic fraud/finance)

Synth CDO

Welcome to a 4 part series dedicated to teaching readers about the workings of a selection of credit derivative instruments and related aspects of the financial markets

We will be covering the following topics, in an easy to read format, allowing us all to become more aware of the structure and specifics of these popular financial products, featured heavily in media reports leading up to, and subsequent to, the financial crises in 2008; CDO’s, CLO’s, Credit Default Swaps, Securitisation and Asset Backed Securities amongst others

This first part is dedicated to Credit Derivatives – Types and Structures. You can explore the subject areas of Credit Options, Credit Linked Notes, Synthetic CDOs and CDO Structures

LEARN here
CD Types
CDO Structures

Please reply to this post if you found the material of use