到底是個什麼東東呢？ 先看一下定義：Collateralized Debt Obligations, are sophisticated financial tools that repackage individual loans into a product that can be sold on the secondary market. These packages consist of auto loans, credit card debt, corporate debt， or mortgage debt. They are called collateralized because they have some type of collateral behind them. CDOs are called asset-backed-commercial paper if the package consists of corporate debt, and mortgage-backed-securities if the loans are mortgages. But many times these terms are used interchangeably, so people also call the CDOs backed by mortgages asset-backed-securities, or ABS.
game 中所扮演的角色，書中一位主角， Deutsch Bank 的 Gregg Lippman， 這樣總結道：
"The sub-prime mortgage market was like a great financial tug-of-war. On one side pulled the Wall Street machine making the loans, packaging the bonds, and repackaging the worst of the bonds into CDOs and then, when they ran out of loans, creating fake ones out of thin air. On the other side, the short sellers were betting against the loans. The optimists versus the pessimists. The fantasists versus the realists. The wrong versus the right. "
有意思的是，他對於自己作為“將要沉沒的泰坦尼克號”上拔河的一方，
對將要沉沒的船隻和船上的其他人所負有的道德壓力，曾經這樣說過：
"Being short in 2007 and making money from it was fun, because we were short bad guys. But in 2008 it was the entire financial system that was at risk. We were still short. But you dont want the system to crash. Its sort of like the floods about to happen and you are Noah. You are the ark. Yeah, you are okay. But you are not happy looking out at the flood. Thats not a happy moment for Noah." 書中另外一個主要人物，愛斯曼的助手Vinny, 則對路易斯這樣說：“The way we thought about it, which we dont like, is that by shorting this market, were creating the liquidity to keep the market going."
當然，我的意思並非要這些本來就是為投資收益而工作的hedge fund investors，為別人製造的危機負什麼道義上的責任，而是想指出這個
“everything is correlated ”的遊戲中錯綜複雜，背後千絲萬縷的關係。事實上，愛斯曼和其他的“先知先覺”者們在2005-2007 年間曾經多次對有關方面提出警告，但奇怪的是幾乎沒有人相信甚至理睬他們。如果說高盛和其他的遊戲參與者們這樣做，是為了防止他們破壞自己精心設計的“盈利工具”，還情有可原的話，那麼本來應該持有獨立立場，維護投資市場的秩序和投資者利益的專業評級機構如 S&P and Moodys 等，也對這些“忠告”置之不理，就很難理解了。從書中的有關細節來看，這些本應該扮演“力挽狂瀾”的監管者角色的評級機構，實際上在某種程度上，成為了“推波助瀾”的幕後操手之一。這, 才是“末日帝國內幕”中真正讓我感到震驚的地方。
在
2007 年的一個以CDO 為主題的行業集會上，愛斯曼終於意識到，“All the stuff I was worried about, the ratings agencies didnt care. I remember sitting there thinking: Jeez, this is really pathetic." 當然S&P 和 Moodys 本身作為上市公司，也要顧及自身的利益， 而S&P 和穆迪 之間對客戶的競爭也讓兩者輕易不敢“得罪”這些華爾街用戶。用愛斯曼的話來說，就是“S&P was worried if they demanded the data from Wall Street, Wall Street would just go to Moodys for their ratings". 因此，前一陣聽說穆迪對美國可能因為債務過高而失去AAA 級別提出警告的時候, 我忍不住想笑，覺得這實在有點“賊喊捉賊”的諷刺意味。 2008 年十月，一位名叫Frank Raiter 的前S&P 次貸債卷分析師在國會的證詞，再次證明S&P 和穆迪的“商業模式”上存在的結構性問題。 他作證說，S&P 專管次級貸款債卷的主管“根本不認為有對各個債卷包含的貸款進行個別分析的必要”。 他引用的一份 S&P 專管CDO 評級的主管 的一個電郵中這樣說道：“Any request for loan-level tapes is TOTALLY UNNECESSARY! Most originators dont have it and cant provide it. Nevertheless we MUST produce a credit estimate... It is your responsibility to provide these credit estimate and your responsibility to devise some method to do so."
Shocking? Definitely so. 難怪愛斯曼在和S&P 和SEC的有關人員接觸之後，毫不猶豫地賣空了Moodys 的股票！當然，在聽了美國銀行總裁 Ken Lewis 相關講演並下了“Oh my God, hes dumb!” 的結論後，他也毫不猶豫地賣空了BA， UBC， CITI， ML, and Lehman Brothers 的股票。 如果他自己的公司不是名義上屬於 Morgan Stanley旗下，他甚至會賣空MS！！
經過了這樣一場“大危機“的“洗禮”，美國金融界會改變它的“遊戲方式”嗎？政府顯然是決心改變遊戲規則，除了大筆的資金為本來應該破產的銀行輸血，還醞釀出台了不少旨在增強對華爾街進行適當監管的法律。但與此同時，華爾街的big guys 似乎仍然在遊刃有餘地play the system 。為什麼改變會如此艱難？對此，路易斯在 名為“ Everything is Correlated” 的結束章節中這樣回答：
"The reason that American financial culture was so difficult to change -- the reason the political process would prove so slow to force change upon it, even after the subprime mortgage catastrophe - was that it had taken so long to create, and its assumptions had become so deeply embedded. The crisis of 2008 had its roots not just in the subprime loans made in 2005 but in ideas that had hatched in 1985. A friend of mine in Salomon Brothers who created the first mortgage derivative in 1986 used to say - Derivatives are like guns. The problem isnt the tools, its who is using the tools. "
這是一本很有趣的書。作者不愧是“我們時代最優秀的講故事高手”(according to Malcome Gladwell)，將複雜枯燥的金融操作描述得深入淺出，引人入勝。當然這在很大程度上是因為故事本身和主要人物的精彩。不管您是否是金融行業人士，相信都會 enjoy it!
Thanks for answering my question. I am sorry my comment about retirement saving doesn't really closely relate to your topic. The more I learn about the financial institutions, the more worried I am.
Yeah, I think a lot of people want to read this book, which is good!!! I bought my copy, because my son might want to read it for a bonus assignment for his AP Econ course, but I think it’s a bit too much for him.
Kcho1348:
Thanks for sharing your insights! It is sad to read such “insider stories” because it just reveals the very ugly reality of this so-called wealth creating machine. I’ve always wondered how US can survive one after another of financial catastrophes and not being hurt, now I realized that it is indeed because it controls the heart of the capitalism system! It’s like they not only play the role of participating teams in a sport, but also the referee, the game administration board, and the hosting party!! They not only invent the games, they are also the parties who oversees the plays and supposed safeguard it, but as long as there’s self interest involved, this system cannot be trusted. There has to be some regulations, so even though I’ve always been against big government, I do support some degree of government oversight in the banking and investment industry.
However, I didn’t know most of the CDS shares were bought from offshore accounts –I also didn’t realize that the market is that big ($70 trillion by the end of 2007, but shrank to $37 trillion a year later). This is just scary.
Are you still planning on going back to China:)?
Xingxing1:
Thanks for commenting! I’m glad that you liked this review and my other writings.
Like I said, I am not an expert on investment or finance, so I really don’t know how to answer your question. I guess if the system is so crooked, there really isn’t much the ordinary people like you and me can do to protect ourselves, other than just not getting involved.
Nice review. Always like your articles. Thanks for introducing the book to us, though it is a bit hard to understand for me.
My questions is, how ordinary people, like myself, could protest ourselves from this kind of made-up financial products. How do I know if my retirement account manage is not investing my money on these "empty" entity?
A secret offshore company called "ABC Offshore Ltd" can place bets on financial vehicles defaulting and get "insurance on the failure", and the only thing the desk manager knows is that when the insured party defaults, the payment gets transferred to a numbered account, which is also secret.
To open an account through the British Virgin Islands (BVI) financial services Commission, one only needs to wire 500 bucks a year to the registrar to keep a "good standing" and $1,500 to $3,000 to a lawyer called a "Registered Agent".
Under BVI law, the company reporting requirements are limited to the name of the company, year of incorporation, company number, and registered agent. Under law, the company's directors, shareholders, employees, financial statements, what they do, and where they do it are completely secret.
An entity may register and do business anywhere in the world, except where the company is registered. It is estimated by the Suisse that most of the 70 trillion in Credit Default Swaps originated from companies in the Caribbean.
All of these CDS agreements are PRIVATE, and they are all priced in dollars. Banks are off loading their hard assets at fire sale value to get short term dollars to pay off these "default bets".
That is why I see the dollar will decline in a big way a few years down the road. The banks leverage 30 to 40 times of their assets. Just wait for the de-leveraging in the coming years.
You could be a desk manager at AIG, or other banks, and have an offshore entity placing bets on your "own" company". Now, AIG is 85% own by U.S. taxpayers and they are planning to pay tens of billions bonus this year? How sad?
Just like you have $100 dollars in your pocket, you bet $3,500 on a gambling table. The U.S. taxpayers will pay the loss, if you lost the bet. And you pocket the money, when you win. What a deal?
The architects of subprime are based in the Caribbean, but you will never identify them. They sold banks the MBS/CDO (note: MBS is Mortgage Backed Security, CDO is Collateralized Debt Obligations, CDO is a combination of whole bunch of ABS. ABS is Assets Backed Security, such as mortgages, credit card debts, home equity loans) adjust in two years, because they invented the products.
Transparent investors saw the potential risk, but were attracted by high monthly yield spreads. CDS allows for 100 or more bets to be put on the full value of the default policy, far exceeding what the banks have in cash in case of such a default. The amount estimated this month is 12 trillion, which represents more money than Americans have in checking and savings (7 Trillion).
It’s unfortunate that these banks also took the 7 trillion of your money and used it as collateral to take out loans in excess of 70 trillion so they could generate 70 trillion in loans.
The bubble created in Wall Street is 10 times the combined savings and checking accounts in America.
U.S. is a sad joke...... I am going back to China.
