Vegas & The Aftermath - Diary

[hector62]

It would be a lot easier to download " Too big to fail" as a torrent and watch it on your laptop. I just checked and it is readily available.

[tikay]

It would be a lot easier to download " Too big to fail" as a torrent and watch it on your laptop. I just checked and it is readily available.

Thank you Sir.

Do you really think I could manage to download a torrent? Sounds a bit complicated to me, but I would love to watch it.

[rex008]

Inside Job gets pretty good reviews as well. I've not seen it myself.

I worked in Credit Derivatives IT for 7 years (writing software for processing CD trades, mainly CDS) in the City. Left in July 2007. [X] Good timing. Like to say I saw it all coming, but that would be 100% lie. The CD market went from nothing to massive in about 10 years. The total amount of principal being covered was just jaw-dropping.

[rex008]

It would be a lot easier to download " Too big to fail" as a torrent and watch it on your laptop. I just checked and it is readily available.

Thank you Sir.

Do you really think I could manage to download a torrent? Sounds a bit complicated to me, but I would love to watch it.

Given it would almost certainly be a breach of copyright, and you work for the one of the biggest content providers in the UK, I'm not sure it would be a particularly good idea .

[tikay]

It would be a lot easier to download " Too big to fail" as a torrent and watch it on your laptop. I just checked and it is readily available.

Thank you Sir.

Do you really think I could manage to download a torrent? Sounds a bit complicated to me, but I would love to watch it.

Given it would almost certainly be a breach of copyright, and you work for the one of the biggest content providers in the UK, I'm not sure it would be a particularly good idea .

Ahh, I wondered about that. I try to avoid illegal stuff. Been there, done that, regret it.

[tikay]

Inside Job gets pretty good reviews as well. I've not seen it myself.

I worked in Credit Derivatives IT for 7 years (writing software for processing CD trades, mainly CDS) in the City. Left in July 2007. [X] Good timing. Like to say I saw it all coming, but that would be 100% lie. The CD market went from nothing to massive in about 10 years. The total amount of principal being covered was just jaw-dropping.

Really? Tell us more!

I've read 7 or 8 books on the subprime thing now, but it's quite hard work figuring out all the acronyms, & their function.

Are you saying "CD" = "Credit Derivatives"?

The stuff which fascinated me was "CDS" = "Credit Default Swaps"

See....

http://en.wikipedia.org/wiki/Credit_default_swap

....& "CDO's" = Collaterized Debt Obligations", which, iirc, were a sort of Bond, comprised of "packages of Mortgage Loans sort of sliced up into tranches. 

http://en.wikipedia.org/wiki/Collateralized_debt_obligation

My eyes bled at times, trying to figure how they worked.

Essentially, Wall Street created these instruments to squeeze better returns, but the thing eventually imploded, & from there, it was all downhill. I think it's kinda exciting that a blonde understood all that stuff. You, not me, that is.

[RED-DOG]

 

[taximan007]

Not sure I can cope with much more of this 'cultured' stuff, might have a trip to the 'other side' see what we are discussing there 

[RED-DOG]

Not sure I can cope with much more of this 'cultured' stuff, might have a trip to the 'other side' see what we are discussing there 

Er.. Don't hold your breath.

[Laxie]

Both diaries are taking me down memory lane for very different reasons this morning.  Knock it off the pair of ya or I'll get nothing done around the place!

[tikay]

Not sure I can cope with much more of this 'cultured' stuff, might have a trip to the 'other side' see what we are discussing there 

Worry not Taxi, I have something a little more down to earth very shortly, which you'll enjoy.

Top Marks in this Diary, Skid Marks next door.

[hector62]

In that case sign up to Love Film ( 2 week free trial ) and they will mail the film to you in DVD format.

[tikay]

In that case sign up to Love Film ( 2 week free trial ) and they will mail the film to you in DVD format.

Top man, tyvm, I prefer that route.

I know most peeps think it's OK, I'm really not keen on this fad of downloading stuff if it's illegal. Do as thy will be done, & all that - I don't like peeps stealing from me, so it cuts both ways. But thanks for the suggestion, I appreciated it.

[The Camel]

Inside Job gets pretty good reviews as well. I've not seen it myself.

I worked in Credit Derivatives IT for 7 years (writing software for processing CD trades, mainly CDS) in the City. Left in July 2007. [X] Good timing. Like to say I saw it all coming, but that would be 100% lie. The CD market went from nothing to massive in about 10 years. The total amount of principal being covered was just jaw-dropping.

Really? Tell us more!

I've read 7 or 8 books on the subprime thing now, but it's quite hard work figuring out all the acronyms, & their function.

Are you saying "CD" = "Credit Derivatives"?

The stuff which fascinated me was "CDS" = "Credit Default Swaps"

See....

http://en.wikipedia.org/wiki/Credit_default_swap

....& "CDO's" = Collaterized Debt Obligations", which, iirc, were a sort of Bond, comprised of "packages of Mortgage Loans sort of sliced up into tranches. 

http://en.wikipedia.org/wiki/Collateralized_debt_obligation

My eyes bled at times, trying to figure how they worked.

Essentially, Wall Street created these instruments to squeeze better returns, but the thing eventually imploded, & from there, it was all downhill. I think it's kinda exciting that a blonde understood all that stuff. You, not me, that is.

I got Inside Job for Christmas.

Amazingly well made documentary, I spent 90% of the time swearing at the screen until by the end I was throwing cushions.

Made my blood boil!

[rex008]

Inside Job gets pretty good reviews as well. I've not seen it myself.

I worked in Credit Derivatives IT for 7 years (writing software for processing CD trades, mainly CDS) in the City. Left in July 2007. [X] Good timing. Like to say I saw it all coming, but that would be 100% lie. The CD market went from nothing to massive in about 10 years. The total amount of principal being covered was just jaw-dropping.

Really? Tell us more!

I've read 7 or 8 books on the subprime thing now, but it's quite hard work figuring out all the acronyms, & their function.

Are you saying "CD" = "Credit Derivatives"?

The stuff which fascinated me was "CDS" = "Credit Default Swaps"

See....

http://en.wikipedia.org/wiki/Credit_default_swap

....& "CDO's" = Collaterized Debt Obligations", which, iirc, were a sort of Bond, comprised of "packages of Mortgage Loans sort of sliced up into tranches. 

http://en.wikipedia.org/wiki/Collateralized_debt_obligation

My eyes bled at times, trying to figure how they worked.

Essentially, Wall Street created these instruments to squeeze better returns, but the thing eventually imploded, & from there, it was all downhill. I think it's kinda exciting that a blonde understood all that stuff. You, not me, that is.

I have a suspicion that I'd put 90% of your readers to sleep fairly quickly . CDSs are fairly straightforward - I usually try and explain these things in terms of insurance, as that's essentially what most of them are. You charge premiums expecting that a certain proportion of things will fail, based on expectation from past events (like any insurance market). It fails, you pay out, you take the asset and try and recover value from it (like selling a written off car for scrap). Most CDSs were originally priced with a fairly high recovery rate - 70% or so - they assumed if a company defaulted, you would still be able to recover about 70% of it's debt from it's assets. This first went horribly wrong when Parmalat went under in 2004 - IIRC the recovery rate actually achieved there was <10%, and there was a large amount of CDS issued against the company. A lot of CDS issuers did badly here.

The next foreboding of doom came with the "correlation crisis" in 2005. We were running around like headless chickens during that period, but I doubt anyone outside the CDS industry even knew/knows about it. Risk was assessed based on likelihood of things defaulting being related, or correlated. So if Ford went under, GM was also likely to go under, for instance, assuming it was a worldwide car industry downturn. Of course in some cases it could be the other way round - removal of competition makes those outcomes negatively correlated. So how much correlation there was between different credit products affected your risk calculations and your pricing. Except sometime around 2005, the market pricing and the models started wildly diverging. Basically the models that the entire industry was based on were realised to be pretty much crap in a can. Which was rather worrying. Of course everything was rewritten and it was all perfect from then on.....

Explaining how CDOs work takes at least a whiteboard, frankly. I suspect you've got a pretty good knowledge from reading the books. The interesting thing is why they existed in the first place - basically US retail banks are only allowed to invest customers' money in AAA rated assets in order to protect them (supposedly). Which generally pay pretty small returns - less risk, less reward. So if you can package up not so good assets in such a way that the rating agencies think they are AAA rated, and pay out a bigger return than other AAA stuff, then you're on to a winner. Which is pretty much was CDOs did.  The customer might get a better return, the retail bank takes a bigger cut, the CDO issuer makes his margin, win, win, win. You even get some lower rated CDOs being packaged up into CDOs themselves, what we called CDO squared. Of course it then turned out that these things maybe should not have been AAA rated at all, and the banks, and customers (or governments) are rather shafted. Greed all round, frankly. Personally I think there is a vast amount of blame you can spread around many many parties for this.

Jeez, I've written an essay. Sorry to everyone else.

I reckon there is much worse to come, tbh. I thought this was an interesting way to put things:



How anyone can think this is possibly sustainable is beyond me.