Links on Securitization, etc

Financial Crisis Overview:

How subprime blew up CDOs which blew up the market.


Fed Study:

(And for those who missed these the first time.)


Private Label:



(another securitization that’s been causing trouble):

Graphical explanation:

Mathematics of CDO rating (layman’s edition):

Future of CDOs:

Synthetic CDOs:


Super Seniors:

Super Senior Q&A:


Liquidity & the Crisis:


Trading volume:

Aggregate demand:

Ratings agency incompetence

…and how it made CDO blowups possible: (355 KB PDF)

Update:  More on Liquidity & the Crisis:

Update #2:  Methinks it unlikely that this is merely a liquidity crisis.  Home prices bubbled, and generated lots of bad loans (& losses therefrom) as a result.  Many of those losses are probably “permanent”, in the sense that home prices will probably not rise to levels sufficient to make those loans “good” for years to come.  Those losses have to be borne by somebody.  While it’s possible that the magic of securitization has distributed all those losses to foreigners or non-systemically-important institutions (financial or otherwise), given banks’ non-trivial holdings of securities w/ residential RE exposure (e.g., agency & private RMBS, & CDOs backed thereby), as well as loans held in portfolio (e.g., mortgages, HEL(OC)s), it makes sense that at least some of those losses will end up w/ banks.  Aside from RE, there’s also losses in other loan areas (e.g., CRE, credit cards) that are probably inevitable given the recession.


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