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1,125,000,300 = The Number Of Pages Needed To Be Read For Every CDO Squared Purchase
One of Zero Hedge's all time favorite charts is the following, which demonstrates the full breadth of Wall Street "complexity" ingenuity, and highlights the incremental layering upon layering of hollow synthetic securities in the form of "leverage" that allowed the housing boom to explode to unprecedented levels, and to create artificial money flooding the shadow banking system which among other things was used to pad ridiculous banker bonuses over the past decade.
Today, Citi's Matt King has taken a humorous approach on this topic, and has concluded that in order for investors in a CDO2 to have a complete understanding of all the nuances in their investment (based on filed information), they would need to read precisely 1,125,000,300 pages worth of information for every CDO2 purchased to be aware of everything that was being acquired. And this even ignores the fact that recent robosigning revelations may have rendered the entire reading process moot as the entire RMBS foundation may have been built upon a complete sham.
Has anyone ever done this? Of course not. In fact, buysiders would be lucky if anyone even read 1 page when they bought something. This is precisely the reason why Goldman et al relied on the "sophisticated investor" myth to peddle toxic products which eventually imploded and nearly took down the financial system with them. It also explains why everyone relied in the rating agencies which were nothing more than an aggregator of group think, allowing this 1 billion plus pages to be trickled down into a simple phrase, most usually AAA.
We now know how Wall Street's laziness ended up impacting the entire world, and with tens of trillions of dollars pledged by global central bankers to prop up the collapse of the shadow system, and effectively being the sole and only reason for the existence of QE1, 2, etc, the most simple explanation of what quantitative easing is simply Ben Bernanke's way to atone, using taxpayer money, for the laziness of aan entire generation, which confused staring at a Bloomberg screen with work, and assumed that gargantuan pay offs are an equitable trade off for making the worst and most uninformed bet in history.
Instead of hiring an army of RoboSigners, BofA et al should have instead hired millions of RoboReaders. Perhaps then, and only then, would someone know just how far up the creek we are currently, with absolutely no paddles.
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Sorry to be Mr Spam junkboy but, for all interested, here's the URL of the official Turd Ferguson Metals Report. I promise to only do this once (as opposed to GrandSuperCycle).
http://tfmetalsreport.blogspot.com/
always appreciate your commentary, Turd. Will check it out.
Those pages are for trading, not for reading.
I'll be checking it daily.
Ah, Turd, you just dont like Grand Puper Pop-sicle cause he is wrong mostly...
I traded dead against his FX calls for months (mostly by accident) and I think my tools are better than his...
No E-WAVES, just a 12 year (tested) hands on scalping method in FX, I dont care what the larger trend is... in and out quick like my last booty call...
CKF
EDIT:
PS I think you are a pretty smart turd!
GrandSuperCycle
Has made me ten grand ... ?1?@?# ????
Thanks Turd. Check out GBG..I started accumulating in April.
Already bookmarked it Spammy. (thanks for your views)
You are very welcome Turd.
Awesome!
is there a way to get comment privilges at turds blog - without providing my telefon number for google friend connect or ordering a blog I don't need. To be just a wordpress user obviously is not enough.
For google: these "censored" will never get my tel#
Can't the HTF bots just be assigned to read the 1,125,000,300 pages on weekends? Or would that anger them?
http://www.acereader.com
tl;dr
Oh, stop being so pessimistic. For every problem, there's a solution.
Bring on the Robo-Readers.
http://en.wikipedia.org/wiki/Speed_reading
http://www.youtube.com/watch?v=1nMP4U8JQDo
If someone can find the SNL skit on Evelyn Woodski Slow Reading ...
Yeah - cute. It would have taken some balls to publish this when Citi was creating this shit. Kind of trivial pursuit now.
rating agencies which were nothing more than an aggregator of group think
That is just brilliant, captures all that is wrong with the banking system.
Well maybe not all, but the crux.
Does this math add up?
Wouldn't the correct equation be [1] + [4] * ( [2] +( [3] * [5] ) )
Giving the slightly less daunting figure of 3,787,800 pages ....
Let's say an analyst can read 60 pgs/hr and a structured products team has 10 members working 100 hour weeks. Or 60,000 pages a week.
Could be done in slightly over a year?
hahaha :-)
Aren't numbers fun...
<delete>
Wait a second. Wall Street wasn't lazy. They were driving 150 miles an hour down the Pacific Coast Highway without brakes. All they did was take out massive amounts of insurance in the form of CDS contracts and the rights to politician's rectums. And Helicopter Ben's move won't prop up the bad bets of investors in CDO2's any more than an insert will prop up a guy whose prostate surgery went horribly, horribly wrong. That is to say, at some point, the poor schmuck will want to take a pee without hitting himself in the face.
Having said that, I would like to apologize for the above analogies, which have caused a bit of vomit to come up in the back of my throat...
The ability to speed read is not the only thing that would have been required. Comprehension of existing law would also have helped.
"This is precisely the reason why Goldman et al relied on the "sophisticated investor" myth to peddle toxic products..."
Akin to arguing that you need to understand the assembly of every screw and component that goes into a car...
If the car came with the disclosure on page 1,149,000,000 of the operating manual that the brake did not operate, would it be bought?
nice analogy.
+AAA
BTW, it seems the first mention of this estimate comes from Andrew Haldane of the BofE
www.bankofengland.co.uk/publications/speeches/2009/speech386.pdf
Not to mention the footnotes.
I'm pretty certain the author made a mathematical error. Why would you multiply pages by pages? ( [2] and [3]) . Then the units would be pages^2.
Bonds, baby, bonds...
Masters of the Universe, big margins, control fraud, bullshit wins.
+1,125,000,300
Bonds have more fun...
The page number total is actually UNDERSTATED given that it doesn't include the ridiculously thick Indentures, which MUST be read if you really want to understand the CDOs...
"Do we admit that control over the economy in the past decade was ceded to a small
group of rapacious criminals who to this day are engaged in a mind-numbing campaign of theft on a global scale? Or do we pretend that, minus a few bumps in the road that have mostly been smoothed out, the clean-hands capitalism of Adam Smith still rules the day in America? In other words, do people need to know the real version, in all its majestic whorebotchery, or can we get away with some bullshit cover story? " -- Matt Taibbi
Or, do we maybe admit that maybe the "clean-hands capitalism of Adam Smith" wasn't so clean, either?
Nah. Gold to $1700.
Who is Adam Smith?
I just wanted to see the word "whorebotchery" posted here :-)
I agree wholeheartedly.
Nice.
How many angels can dance on a pinhead?
When I was describing CDO^2 to the TF morons, nobody seemed amazed that you could take equity tranches, which I related to my kids as "Tiny Tim's" share of the poor family's food, and pile up a BUNCH of Tiny Tim shares all over town and then somehow turn that into a AAA rated product (the superseniors of this CDO2). My kids on the other hand were quite puzzled because anything that takes that long to explain has to be complete bullshit.
anything that takes that long to explain has to be complete bullshit.
I want a t-shirt with this printed on it in all caps.
Wait, but I thought the private sector was supposed to reduce bureaucracy!
It doesn't really work that way?
LOL
Gold to $1700.....maybe.
Remember the Vanity Fair profile of Michael Burry, which suggested that one of his most important advantages as an investor was his Asbergers-powered ability to actually sit down and read through 130-page prospectuses?
Indeed, he was early onto the issue, when prospectuses were still only 130 pages. It would have taken Rainman like qualities to keep up with the CDO^2
"Leverage," Bitchez.
here is the link to the original article by Haldane... see page 17 and 37 for the table.
http://www.bankofengland.co.uk/publications/speeches/2009/speech386.pdf
Wall Street knew and insiders flew - Tyler 182
http://www.youtube.com/watch?v=1_t44siFyb4
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