到底是个什么东东呢？ 先看一下定义：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，书中一位主角， Deutsch Bank 的 Gregg Lippman， 这样总结道：
"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，他对于自己作为“将要沉没的泰坦尼克号”上拔河的一方，
对将要沉没的船只和船上的其他人所负有的道德压力，曾经这样说过：
"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." 书中另外一个主要人物，爱斯曼的助手Vinny, 则对路易斯这样说：“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."
当然，我的意思并非要这些本来就是为投资收益而工作的hedge fund investors，为别人制造的危机负什么道义上的责任，而是想指出这个
“everything is correlated ”的游戏中错综复杂，背后千丝万缕的关系。事实上，爱斯曼和其他的“先知先觉”者们在2005-2007 年间曾经多次对有关方面提出警告，但奇怪的是几乎没有人相信甚至理睬他们。如果说高盛和其他的游戏参与者们这样做，是为了防止他们破坏自己精心设计的“盈利工具”，还情有可原的话，那么本来应该持有独立立场，维护投资市场的秩序和投资者利益的专业评级机构如 S&P and Moodys 等，也对这些“忠告”置之不理，就很难理解了。从书中的有关细节来看，这些本应该扮演“力挽狂澜”的监管者角色的评级机构，实际上在某种程度上，成为了“推波助澜”的幕后操手之一。这, 才是“末日帝国内幕”中真正让我感到震惊的地方。
在
2007 年的一个以CDO 为主题的行业集会上，爱斯曼终于意识到，“All the stuff I was worried about, the ratings agencies didnt care. I remember sitting there thinking: Jeez, this is really pathetic." 当然S&P 和 Moodys 本身作为上市公司，也要顾及自身的利益， 而S&P 和穆迪 之间对客户的竞争也让两者轻易不敢“得罪”这些华尔街用户。用爱斯曼的话来说，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，前一阵听说穆迪对美国可能因为债务过高而失去AAA 级别提出警告的时候, 我忍不住想笑，觉得这实在有点“贼喊捉贼”的讽刺意味。 2008 年十月，一位名叫Frank Raiter 的前S&P 次贷债卷分析师在国会的证词，再次证明S&P 和穆迪的“商业模式”上存在的结构性问题。 他作证说，S&P 专管次级贷款债卷的主管“根本不认为有对各个债卷包含的贷款进行个别分析的必要”。 他引用的一份 S&P 专管CDO 评级的主管 的一个电邮中这样说道：“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. 难怪爱斯曼在和S&P 和SEC的有关人员接触之后，毫不犹豫地卖空了Moodys 的股票！当然，在听了美国银行总裁 Ken Lewis 相关讲演并下了“Oh my God, hes dumb!” 的结论后，他也毫不犹豫地卖空了BA， UBC， CITI， ML, and Lehman Brothers 的股票。 如果他自己的公司不是名义上属于 Morgan Stanley旗下，他甚至会卖空MS！！
经过了这样一场“大危机“的“洗礼”，美国金融界会改变它的“游戏方式”吗？政府显然是决心改变游戏规则，除了大笔的资金为本来应该破产的银行输血，还酝酿出台了不少旨在增强对华尔街进行适当监管的法律。但与此同时，华尔街的big guys 似乎仍然在游刃有余地play the system 。为什么改变会如此艰难？对此，路易斯在 名为“ Everything is Correlated” 的结束章节中这样回答：
"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. "
这是一本很有趣的书。作者不愧是“我们时代最优秀的讲故事高手”(according to Malcome Gladwell)，将复杂枯燥的金融操作描述得深入浅出，引人入胜。当然这在很大程度上是因为故事本身和主要人物的精彩。不管您是否是金融行业人士，相信都会 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.
