de ja vu, page-182

Thanks Bruce,

Excellent article. Just goes to show that the banks buying protection are using sellers that have only 1/172 times exposure to asset (collateral) backing. This equates to Joe Bloggs buying a house for $172,000 with only $1000 cash to secure the contract. Very scary at those proportions.

If this is not a time bomb for the financial sector - what is?

Avg of 100B USD in "documented exposure", fed has pumped in some here and there.

I would love to know what figure of these CDO's have been securitised and sold by hedge funds (so they can outsource the risk). Given this article top end documented exposure of $158B USD, Itd have to be in the order of 10's of trillions of dollars.

The type of securitised instrument that I'm most concerned about is the 30 day (and short term) debt instruments. Easy to sell and were easy to cover at most times. But when auditors start checking out protections sellers assets again (and they can't get extra collateral) big probs.