Triple A liquidity and the Oracle of Omaha goes long

Submitted by Timmy the Wonder Dog on Thu, 10/02/2008 - 4:13pm. Tags:

Economics and Business

The employment of the classical CDO structure, high quality debt and a 20% first loss exposure. There is a financial twist, in that the Triple A liqudity provider will get a taste of the profit.

It certainly expands the numbers of bidders for the mortgage assets which will be put up for bid and that is a good thing. But I would suggest that the Triple A liquidity be replaced by a Triple A guaranty.

"Making sure your tires are properly inflated, simple thing, but we could save all the oil that they're talking about getting off drilling, if everybody was just inflating their tires and getting regular tune-ups. You could actually save just as much." Ob

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That guy is whip smart. (#126158)

by Jordan on Thu, 10/02/2008 - 4:41pm

But I'd be more interested in hearing his thoughts on how minimal trade rules could be set up so that small numbers of speculators/financiers/investors are not able to wreck the entire economy so easily.

Tomsyl tells an apocryphal story of a neighbor involved in CDS trades who tells of 100:1 leverage on some of those derivatives. Should that much money ever be put at that much risk?

Before you criticize someone, you should walk a mile in their shoes. That way when you criticize them, you're a mile away and you have their shoes. -JH

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Whip smart, yet he's backing Obama (#126181)

by Spartacvs on Thu, 10/02/2008 - 5:17pm

Go figure?

Mark to market and having the right people in place at the Fed. 'Cos you can't hope to change human behavior to eliminate fraud and abuse only regulate it or at least catch before too much damage gets done. At least that's what I heard him intone last night on Charlie Rose.

GW Bush, leading contender for worst President ever.

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Low and behold, I have another diary on the speculators (#126163)

by Timmy the Wonder Dog on Thu, 10/02/2008 - 4:56pm

imagine that. Just a taste mind you

...I do think I do not want the same kind of focus on safety and soundness that we have in OCC [Office of the Comptroller of the Currency] and OTS [Office of Thrift Supervision]. I want to roll the dice a little bit more in this situation towards subsidized housing. . . .

I would be interested in hearing your thoughts on "minimal trade rules" and Tomsly leverage scenario. A "naked call" has unlimited leaverage but you usually have to step up with additional capital if you go under water.

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