Tuesday, April 14, 2009

How Many Toxic Assets Are There?

Has anyone counted this stuff?

I am dumbfounded daily at the reporting and journaling of the "financial crisis" that we are in.

We know that Collateralized Debt Obligations (CDOs) are the root of our current problems. We don't know 2 very important things:

1. What is the combined worth of the CDOs that have been issued?
2. How many CDOs were actually issued?

Have you heard either of these two issues discussed in any analysis of this stuff?

Exactly how much is the dollar value of all of the CDOs that were produced? It is always given as more than 3, 10, or 18 trillion dollars. Tweny trillion dollars is greater than each of those numbers, and so is 18 trillion and 1 dollar.

So, what is the actual dollar value of the CDOs that were written? (It is sufficient to report par value at this point.)

And how many CDOs were written? Was it one CDO or was it 18 trillion?

Finally, how many CDOs were bad, i.e. had at least one of its constituent mortgages defaulted upon?

Not every CDO is constructed from defaulted mortgages. Not every CDO is actually worthless.

When Western Union Bank unwound their CDOs and sold them at market value, they went for an average of 19% of their par value. That's not bad.

All notes are sold at discounted values from their par value. Even U.S. Treasury notes are sold at discounted values.

Let me ask again, just one last time, how many are there and what is their aggregate value?

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