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November 16, 2009

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Paul Mason

Hi there.

I have just read this article - found it very interesting..
I have followed the financial market meltdown closely from Australia.
I like the level of cynicism in your article - i think if more analysts were more cyncial, there would be far less mistakes..

One point that you may have missed is this.
Many (not all) CDO's were underwritten prior to issuing by major insurance companies (think AIG!). Therefore, the credit ratings companies gave them AAA ratings becuase they were only rating the CDO.. not the insurance company that had underwritten them.. this also explains how CDO's spread so far across the industry.

And in most cases - CDO's did yeild significantly higher than Gov backed securites.

I have written an article that helps to explain the CDO structure by comparing them to Bananas. I think you will enjoy.

Regards,


Paul
https://behindthefinance.blogspot.com

Bds

RESPONSE to READER COMMENTS

Paul - thank you very much for taking the time to comment. We will be sure to read your CDO article.

Sincerely,

Wall Street Law Blog

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