Yves Smith (YS) has a 27 February 2009 post at her Naked Capitalism about CDOs, referring to Gillian Tett's FT piece. Read it, link: http://www.nakedcapitalism.com/2009/02/more-on-simply-dreadful-performance-of.html. YS's got it!
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Bippidy bop... from Yves...
But with the ABX now suggesting that triple A subprime mortgage assets are worth around 40 cents on the dollar (depending on the precise vintage), the message from that might almost be too optimistic in relation to some CDOs.
So where does that leave the banks? In reality we will not know whether that horrific 95 per cent loss is unusual until the rest of the CDO of ABS are liquidated too.
But for my part, I suspect that the saga strengthens the case for financiers now biting the bullet – and conducting some open auctions of this stuff, to get a bit of market price discovery....
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