Economic Meltdown: CDOs explained

[dccrossman]

For those who may not already already know, CDOs are Collateralized Debt Obligations. Fancy way of combining several pieces of bad debt into a security and then saying that the risk has been diluted.

Largely blamed for a significant portion of the current mess:



And oh yeah, Dogbert is my hero.

=)

[Fleshdancer]

1. HAHA!

That explains it all very well. Great cartoon, thanks for posting it.

[sui generis]

2. I work out with a CLO chief in the early mornings

You are vastly oversimplifying things - this almost always refers to corporate paper, and is traditionally a means of betting that a company won't go under long enough to pay back its debts and that there is enough "good" paper in the portfolio to offset the bad paper.

It costs too much to try to realize a collateralized asset to make it a goal of the investment.