As someone who's in it's late 20s now, I always thought the idea of selling IOUs, debts, loans and invoices for cash is batshit crazy to me to be honest.
I never knew my loan and others loan could be packaged together as a financial product, the most famous one being the Mortgage backed securities (MBS), and then repackaged with other MBSes together to make a tranches of debts/loan known as Collateralized Debt Obligation (CDO).
Both MBS and CDO, plus Gaussian Copula that is being used to price CDO, not realizing the implied volatility is actually higher than expected that poisoned the whole scheme, contributed heavily into the unwinding of the 2008 Great Financial Crisis and is what killed Lehman Brothers, and set the powder keg to detonate the Eurodollar crisis 3 years later.
Yet it has been 20 years. 20 fucking years. The banks and the governments around the world hasn't fucking changed. Those CDO money ended up in private credit and Special Purpose Vehicles (SPV) which both of them is in its pending doom.
I can't fathom to imagine how fucked would this financial tsunami would be.
I never knew my loan and others loan could be packaged together as a financial product, the most famous one being the Mortgage backed securities (MBS), and then repackaged with other MBSes together to make a tranches of debts/loan known as Collateralized Debt Obligation (CDO).
Both MBS and CDO, plus Gaussian Copula that is being used to price CDO, not realizing the implied volatility is actually higher than expected that poisoned the whole scheme, contributed heavily into the unwinding of the 2008 Great Financial Crisis and is what killed Lehman Brothers, and set the powder keg to detonate the Eurodollar crisis 3 years later.
Yet it has been 20 years. 20 fucking years. The banks and the governments around the world hasn't fucking changed. Those CDO money ended up in private credit and Special Purpose Vehicles (SPV) which both of them is in its pending doom.
I can't fathom to imagine how fucked would this financial tsunami would be.