Tuesday, August 14, 2007

so what really happened?

So here is my quick and dirty analysis (my keyboard is not working well - so cant write details):

1. Subprime loans were made to folks who never should have gotten them - sub par FICO scores, no income, no doc, 0% down... comon!! (2006 vintage was esp bad - you know, like rotten wine)

2. Home prices (on a national level) nose-dived for the first time since great depression - leading to massive defaults. Why does the subprime guy care - he leaves the keys with the bank and drives away in his truck - his home just lost 10$ of value - he has -ve equity, and he cannot refinance!

3. HEL deals had a capital strcuture - 0-5% equity, and above it sat the ignominious BBB- bond!! (ah here comes the catch). The losses (historically below 5% were now being projected in the 10 to even 15% range. The BBB- bonds were toast...

4. All this would have been still ok - i mean about 30bn losses...

5. But enter the ABS CDO market (a 250 bn issuance market), which recycled the BBB- bonds into another tranched product - if your underlying bonds are toast - guess what happens to even highly rated tranches? Result- ABX indices skydive like there is no tomorrow. (go to Markit website..)

6. Who's to blame - i think... the rating agencies (who made a bundle before all this mess).

48 Comments:

Blogger Eugene said...

Thanks for the very informative and supporting blog (I start my MFE training next March). Your posts are very encouraging as I began to believe that it was not humanly possible work, prepare for CFA test, take online classes and participate in pre-program activities at the same time.

Any posts/comments about future career paths and first impressions at new workplace would be highly appreciated. I hope you’ll continue updating the blog.

11:31 AM, October 01, 2007  
Blogger smooth said...

Hey! I am currently in my final year of engineering and am seriously considering applying for a financial engieering program. I have a few queries reagarding the same and would appreciate your point of view since you've been down this path.

a) Which are the good colleges which offer Financial Engieering Degrees?

b) Is it better to apply for such a course right after college or work and apply with work experience

c) I've already written my GMAT and scored 760. However there are some universities which accept GMAT scores and some which don't. Which are the top uni's which accept gmat scores?

My email address is: surirohan@gmail.com

Would really appreciate a response!

12:57 AM, October 19, 2007  
Blogger Vivek said...

dude, why blame the ratings agencies...the i bankers knew the ratings were a arbitrage....they knew it all the damm way, and everyone talked about it..
they made far more money than ratings agencies..

5:21 AM, October 25, 2007  
Blogger Quantjock said...

actually Vivek - that is true - the i-banks were surely in the know- now of course they are paying for it - just ask O'Neal and Chuck Prince...

1:53 PM, November 03, 2007  
Blogger pixie said...

Hello quantjock,

I am an FE student at Columbia and we've been told to not limit ourselves to applying for positions or even internships to the US branches of I-Banks but to explore opportunities in Asia and Europe. The general feeling is that although the banks are not openly admitting it there may be hiring freezes doing the rounds in 2008.
As someone who can see the recruiting cycle from the inside, how valid a point do you think this is?

8:44 PM, November 25, 2007  
Blogger albertmills said...

What's the full time job situation look like? Are you and your classmates getting full time offers from the companies you are intering at?

1:04 PM, December 10, 2007  
Blogger nish said...

helo
am a2nd year engineering student from india and am pretty serious about takin up financial engg at my masters level...can u please tel me about the good schools and how should i go about it??
nice articles i must say..
cheers
nishit!!

6:30 AM, January 27, 2009  
Blogger 討厭fu said...

從人生中拿走友誼,猶如從生活中移走陽光........................................

4:39 AM, March 01, 2010  
Blogger 哭泣 said...

每個人生命中都可能遇到貴人,這些貴人不一定真的尊貴,他可能是陌生人,也可能是你的敵人。..................................................

12:08 AM, March 19, 2010  
Blogger 怡如 said...

成人色情動畫色情介紹男同志色情片男同志色情影片18色情遊戲色情免費線上影色情貼圖分享色情貼圖免費看色情貼圖庫色情貼影區色情愛片色情照片免費看色情遊戲色情電影賞色情圖片色情圖貼區色情圖網站色情圖影片色情漫畫天堂色情貼無色情貼區色情貼片免費看色情免費線上影片色情言情小說色情拍貼色情相片色情美女遊戲色情做愛電影色情動慢色情情色論壇上班族聊天室 免費a片下載 6k聊天室一葉情貼圖片區

3:24 AM, March 30, 2010  
Blogger 水憲妤慧 said...

喜歡看大家的文章,每篇都是一個故事,都是一種心情~~祝大家開心愉快 ........................................

6:48 AM, April 08, 2010  
Blogger 于芷奇名 said...

IT IS A VERY NICE SUGGESTION, THANK YOU LOTS! ........................................

7:25 PM, April 17, 2010  
Blogger JeremiahRenne332 said...

Knowledge is power.......................................................

8:18 AM, April 25, 2010  
Blogger 文行 said...

nice job! waiting for your new artical. ........................................

12:46 AM, May 01, 2010  
Blogger 珮均 said...

As a man sows, so he shall reap. ........................................

1:19 AM, May 06, 2010  
Blogger 品華yur1095is_newson1 said...

非常感謝~3Q~....................................................

5:17 PM, May 11, 2010  
Blogger 韋于倫成 said...

Care killed the cat. take care yourself.........................................

11:30 AM, May 22, 2010  
Blogger 茂慧 said...

春宮性愛教學taiwan sex大奶子台灣情色論壇台灣av女優一夜情留言板女生裸體色情電話a網情色片美女裸照成人笑話巨乳學院裸體寫真av寫真走光照巨奶做愛技巧a圖片淫亂撫摸情色聊天少婦自拍淫娃一夜情聊天av情色本土av女生高潮色情av成人情色貼圖一夜情留言成人圖庫亞洲成人口交技巧性經驗成人18三點全露蕩婦情色自拍貼圖成人漫畫成人漫畫

12:15 AM, May 30, 2010  
Blogger 韋于倫成 said...

很榮幸能到你的BLOG留言o^~^o........................................

8:24 AM, June 04, 2010  
Blogger 于名于名 said...

靠山山倒,靠人人老,靠自己最好。 ............................................................

9:55 PM, June 07, 2010  
Blogger 佩GailBohanan1蓉 said...

Joy often comes after sorrow, like morning after night.............................................................

4:30 AM, June 11, 2010  
Blogger 陳卓人 said...

成熟,就是有能力適應生活中的模糊。..................................................

8:53 PM, June 14, 2010  
Blogger 佳梅 said...

I guess I will need a lot..................................................

3:39 PM, June 18, 2010  
Blogger sada said...

打聲招呼,祝你一切平安!

1:37 PM, June 23, 2010  
Blogger 陳芳 said...

幸福不是一切,人還有責任。....................................................................

6:22 AM, June 27, 2010  
Blogger 原秋原秋 said...

一個人的價值,應該看他貢獻了什麼,而不是他取得了什麼....................................................................

7:47 PM, June 30, 2010  
Blogger 智超智超 said...

人有兩眼一舌,是為了觀察倍於說話的緣故。............................................................

5:53 AM, July 04, 2010  
Blogger 向霖向霖 said...

君子立恆志,小人恆立志。.................................................................

2:03 AM, July 08, 2010  
Blogger ToryO_Viss鈺雯er0316 said...

向著星球長驅直進的人,反比踟躕在峽路上的人,更容易達到目的。............................................................

8:19 AM, July 10, 2010  
Blogger 吳婷婷 said...

到處逛逛~~來繞繞留個言囉~~~~.......................................................

10:07 AM, July 12, 2010  
Blogger 育隆 said...

很精彩的部落格 期待你的繼續加油..................................................................

10:08 AM, July 12, 2010  
Blogger yol22andarodgersyolandarodge33rs said...

人若賺得全世界,賠上自己的靈魂,有什麼益處?......................................................

8:42 PM, July 14, 2010  
Blogger 李志杰 said...

Subtlety is better than force. ............................................................

3:11 AM, July 17, 2010  
Blogger 楊儀卉 said...

Give a fool enough rope and he will hang himself...................................................

6:57 PM, July 19, 2010  
Blogger 家榮家榮 said...

感謝分享,將本身的錯誤想法改正了!............................................................

7:38 AM, July 22, 2010  
Blogger 林彥以林彥以 said...

世間唯一永恆的,就是改變..................................................

2:22 AM, July 25, 2010  
Blogger 魏育如 said...

真是太有道理了~~我支持你~~~............................................................

11:01 PM, July 27, 2010  
Blogger 靜錢怡 said...

所有的資產,在不被諒解時,都成了負債..................................................................

1:33 AM, July 31, 2010  
Blogger 李亦陳宏堯茵 said...

世界上沒有本來就應該的事,因為老天爺也沒有劇本..................................................

3:48 AM, August 03, 2010  
Blogger 敬周喜 said...

Lets cross the bridge when we come to it............................................................

11:59 PM, August 05, 2010  
Blogger 恩宛玲如 said...

與人相處不妨多用眼睛說話,多用嘴巴思考,............................................................

7:48 PM, August 08, 2010  
Blogger v惠王王王娟 said...

知識可以傳授,智慧卻不行。每個人必須成為他自己。. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3:06 AM, August 11, 2010  
Blogger 麗王王珠 said...

人生中最好的禮物就是屬於自己的一部份..................................................

3:59 PM, August 13, 2010  
Blogger 怡屏 said...

人生是故事的創造與遺忘。............................................................

6:31 PM, August 15, 2010  
Blogger 翊翊翊翊張瑜翊翊翊 said...

人生匆匆-把握當下,支持鼓勵~事事如意~............................................................

9:55 PM, August 17, 2010  
Blogger 瑰潼 said...

培養健全孩子最好的方法是父母先成為健全的人。......................................................................

3:52 AM, August 20, 2010  
Blogger 欣侑欣侑欣侑欣侑 said...

多謝美味的心靈雞湯......................................................

7:12 PM, August 22, 2010  
Blogger smplcv said...

Yes, I agree with the dirty analysis..


Chartered Accountant CV

4:51 AM, November 19, 2010  

Post a Comment

<< Home