Economists, the financial industry, bankers, and other societally acceptable gamblers are once again dabbling in synthetic CDO's. For those of you who don't know, I recommend either watching or reading the Big Short. TLDR on that; Synthetic CDO's are financial "packages" that are sold like bonds that are made up of other bets. It's a bet on the outcome of another bet.
The panic in 2007 was caused by rising defaults and missed mortgage payments. Those mortgage payments were put together and sold like a bond to other financial institutions, and were rated as super reliable because "who doesn't pay their mortgage". When those "super reliable" bonds were found out to be junk, everyone realized they were worth a lot less than they thought, which is how trillions of dollars appeared to disappear over night.
During the pandemic, the financial markets stayed remarkably optimistic. There were undeniable concerns but for the most part, the economic sector stayed optimistic that the government would step in to help out, which they did with business stimulus packages. People on the other hand, still have rent and loans due. Enter, the current battle over evictions.
The eviction battle caused by the pandemic will now get decided in the courts, and we will likely see a single court decision determine if millions of people will soon default on their rent, their mortgages, and their rental properties. Given that financial institutions began making financial packages out of these debt obligations back in 2019 and 2020, there is likely to be a repeat of the 2007/2008 bubble depending on the outcome of the lawsuits around Biden's attempts to stave off evictions.
If the courts decide to overturn Biden's evicti
... keep reading on reddit ➡
Here is the difference in 2008 all the money went to the big bank thieves. 2021 apes will be watching the explosion from the moon while eating their tendies.
AMC to the 🌙
Do you know what Synthetic CDO’s are? They basically single handedly crashed the market in 08’. Synthetic CDO’s are bets on the performance of other mortgage (or other) products, rather than a normal CDO which is based on a real mortgage security. When the house failed the whole market failed. Does that sound familiar? Yeah it does. A share callback kills all synthetic shares. Finishing the frauds for once and all. Even if it isn’t exercised, it will still shine light on this whole fiasco.
https://www.stockholdersrights.com
Apologies if this isn't the right sub and if my question isn't clear. I'm not an economist but I've been trying to figure out who profited from the credit default swaps in the wake of the 2008 financial crisis. My understanding is that for the CDOs comprised of actual mortgages there, in essence, wasn't a winner because the value of the house itself plummeted. However for CDSs on mortgages it seems like buyer should have profited once the mortgages defaulted. I know there were some people who made a lot of money (e.g. John Paulson), but my understanding is those individuals/groups/hedge funds(/some investment banks like Goldman Sachs) didn't make nearly as much as was lost through CDSs (specifically in the form of synthetic CDOs)
Hi, from Wikipedia:
> Synthetic CDOs have been criticized as serving as a way of hiding short position of bets against the subprime mortgages from unsuspecting triple-A seeking investors,[9] and contributing to the 2007-2009 financial crisis by amplifying the subprime mortgage housing bubble.
> Total return swap, or TRS (especially in Europe), or total rate of return swap, or TRORS, or Cash Settled Equity Swap is a financial contract that transfers both the credit risk and market risk of an underlying asset.
Where would it be a good place to learn about slightly obscure financial products and the industry that creates them? [Banking]
I know what a CDO is, and I know what a CDS is, but i'm confused about synthetic CDOs. This is how I think they work, but I'm not sure if i'm even remotely close:
Say I invested in a synthetic CDO - would my coupon's source be the premiums that another investor is paying for their credit default swaps? I'm guessing if so, then a synthetic CDO doesn't have tranches?
Synthetic CDOs, which caused the 2007 crisis making a comeback thanks to Citibank
https://businessmirror.com.ph/citi-bringing-back-crisis-inducing-cdos/
Submitted September 27, 2017 at 06:24AM by /u/Hitlerlikemylemonade - https://www.reddit.com/r/news/comments/72te7m/synthetic_cdos_which_caused_the_2007_crisis/?utm_source=ifttt
via /r/news - https://businessmirror.com.ph/citi-bringing-back-crisis-inducing-cdos/
