The Baseline Scenario is a blog about the financial crisis. They have a good post, the Financial Crisis for Beginners.
"We believe that everyone should be able to understand how the financial crisis came about, what it means for all of us, and what our options are for getting out of it. Unfortunately, the vast majority of all writing about the crisis - including this blog - assumes some familiarity with the world of mortgage-backed securities, collateralized debt obligations, credit default swaps, and so on. You’ve probably heard dozens of journalists use these terms without explaining what they means. If you’re confused, this page is for you. Over time, we will be adding more explanations and more links to external sources, so check back for updates. (Some of the explanations on this page are simplified and not 100% accurate; their goal is to explain the key concepts to a general audience.)"
1 comment:
CDOs seem even scarier than CDSs. The NY Times has an interesting article on a school district in Wisconsin that dipped its toes into this market and may well lose $200 million. Apparently, they aren't the only ones. I wouldn't want to hold any muni bonds from places that invested in CDOs but how would you know.
Marketplace has a video explaining CDOs in layman terms.
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