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Wednesday, November 12, 2008

The Financial Crisis From A To Z

Tunku Varadarajan at Forbes has a pretty clever piece titled "The Financial Crisis From A-Z". Here are a few of the items that tickled my fancy:
C is for Credit Default Swaps, defined for me by a Wall Street watcher as: Risk whatever you want, and we insure it; risk too much, taxpayers insure it.

L is for leverage (a means of maximizing your losses), liar loans, Lehman (pronounced "lemon")--and the losses/liabilities that unite them all.

M is for where it all started: the mortgage (which, aptly, means death-pledge). Like the dog, it comes in a variety of breeds, "sub-prime" being a cross between a pit bull and a chihuahua.

Q is for quants, who forgot that, every so often, past performance is no indicator of anything at all.

S is for securitization, the process by which one passes off cat food as caviar.
The other 21 letters are pretty good too. Read the whole thing here.

HT: The Big Picture.

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