{"id":192731,"date":"2009-02-27T18:34:00","date_gmt":"2009-02-27T23:34:00","guid":{"rendered":"https:\/\/www.panix.com\/~msaroff\/40years\/2009\/02\/27\/cdos-how-bad-will-it-get\/"},"modified":"2009-02-27T18:34:00","modified_gmt":"2009-02-27T23:34:00","slug":"cdos-how-bad-will-it-get","status":"publish","type":"post","link":"https:\/\/www.panix.com\/~msaroff\/40years\/2009\/02\/27\/cdos-how-bad-will-it-get\/","title":{"rendered":"CDOs: How Bad Will It Get"},"content":{"rendered":"<p>This is why our banks are insolvent.  Even without the increases in leverage that have been created over the past 15 or so years, when <a href=\"http:\/\/www.ft.com\/cms\/s\/0\/2970532c-0421-11de-845b-000077b07658.html\">you see losses like this<\/a>:<\/p>\n<blockquote style=\"color: rgb(0, 0, 153);\"><p>The real shocker, though, is what has happened after those defaults. JPMorgan estimates that $102bn of CDOs has already been liquidated. The average recovery rate for super-senior tranches of debt \u2013 or the stuff that was supposed to be so ultra safe that it always carried a triple A tag \u2013 has been 32 per cent for the high grade CDOs. With mezzanine CDO\u2019s, though, recovery rates on those AAA assets have been a mere 5 per cent.<\/p><\/blockquote>\n<p>Your bank is toast.<\/p>\n<p>That&#8217;s 30&cent; on the dollar for the best of the best, and just down from that, it&#8217;s 5&cent; on the dollar.<\/p>\n<p>This is why the big banks are insolvent.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>This is why our banks are insolvent. Even without the increases in leverage that have been created over the past 15 or so years, when you see losses like this: The real shocker, though, is what has happened after those defaults. JPMorgan estimates that $102bn of CDOs has already been liquidated. The average recovery rate &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1004,985,1164],"tags":[],"class_list":["post-192731","post","type-post","status-publish","format-standard","hentry","category-finance","category-regulation","category-teotwawki"],"_links":{"self":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/192731"}],"collection":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/comments?post=192731"}],"version-history":[{"count":0,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/192731\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/media?parent=192731"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/categories?post=192731"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/tags?post=192731"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}