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JPMorgan To Issue CMBS Backed By... Defaulted Loans

Tyler Durden's picture


No, this is serious news. Dow Jones reports:

JP. Morgan Chase & Co. (JPM) next year plans to issue the first U.S. commercial mortgage-backed securities supported by defaulted loans since the 1990s as it revives a practice that regulators used to extricate the nation from the savings-and-loan crisis.


The investment bank has approached rating agencies with two pools of distressed loans that it acquired from European banks and other financial institutions, according to people familiar with the matter.


111011010010101010101011 Buffer Overflow

#Ref! #Ref! #Ref! #Ref! #Ref! #Ref! #Ref! #Ref! #Ref!


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Tue, 11/15/2011 - 16:38 | 1880123 Mad Max
Mad Max's picture

I'll be REALLY, REALLY curious what their prospectus says about the enforceability of the mortgages going along with those loans.

Tue, 11/15/2011 - 16:41 | 1880130 Gief Gold Plox
Gief Gold Plox's picture

I am not at all ashamed in admitting that I don't have a clue about how this is supposed to work. Could anyone please explain this rationally? Oh wait,... nevermind.

Tue, 11/15/2011 - 16:55 | 1880197 Sabibaby
Sabibaby's picture

It's a lot like a person backing their bad credit by not paying their bills. You bundle up the unpaid bills in a UBS (unpaid bill security) and then sell it back to creditors, like in never never land...

Tue, 11/15/2011 - 17:30 | 1880305 Steaming_Wookie_Doo
Steaming_Wookie_Doo's picture

Oh my God, I'm really a millionaire! If only I could collateralize myself to CALPERS, since they almost assuredly would be buying the dreck from JPMorgan.

Tue, 11/15/2011 - 17:51 | 1880378 Git_Naked
Git_Naked's picture

It's pretty straightforward actually. Surprised to see that ZH "cannot compute."

Tue, 11/15/2011 - 18:17 | 1880446 Hard1
Hard1's picture

Considering that France, a country with a defaulted banking system, is AAA, a CMBS backed by defaulted loans should clearly be AAA as well.


Hey, even the EFSF is AAA, a pile of troubled european sovereigns backed by themselves and France.

Tue, 11/15/2011 - 18:20 | 1880532 flacon
flacon's picture

Null Pointer Exception on mortgage.getPayment()

Tue, 11/15/2011 - 18:34 | 1880611 TheFourthStooge-ing
Tue, 11/15/2011 - 18:44 | 1880670 iinthesky
iinthesky's picture

Kernel Panic

Tue, 11/15/2011 - 19:47 | 1880870 gmrpeabody
gmrpeabody's picture

Will we be able to get these CMBS through Groupon?

Tue, 11/15/2011 - 20:59 | 1881025 JohnG
JohnG's picture



Wed, 11/16/2011 - 06:00 | 1881921 jeff montanye
jeff montanye's picture

far better to buy a mortgage backed security where you know going in the loans are bad.  it's the finding out after purchase that's the real disappointment.

Tue, 11/15/2011 - 18:43 | 1880664 knukles
knukles's picture

No Mystery At All Folks.

JPM exchanges a pool of Zero Coupon Perpetuals backed by nothing (no cash flows, no perfected titles, no possibility of recovery--- in the extreme case) with Zero Coupon Perpetuals issued by the Federal Reserve (liability, pays no interest which never matures) both of which were created on a computer by enrty of key strokes, neither of which are available in hard copy, tactile form.

What's the problem?

Tue, 11/15/2011 - 18:48 | 1880682 iinthesky
iinthesky's picture

No problem.. they will just sell it to the Bernak

Tue, 11/15/2011 - 20:59 | 1880973 topcallingtroll
topcallingtroll's picture

A small tranch could get rated AAA.


When someone buys up a bunch of bad debts they know roughly the minimum percentage they will collect. Structure half of that as Senior with absolute priority, then the tranches become more equity-like as further pieces are sliced off.

Lets say worst case is five cents on the dollar of a group of bad debts totalling 100 million. Best case is 50 cents on the dollar but you estimate only a ten percent chance of that level of recovery. If the "risk free" portion (half of the minimum of five million you are virtually guaranteed to collect) is being offered at three percent over ten years, then what would the next portion yield if it included 2.5 million that has a hundred percent chance of recovery and an additional 7.5 million in bad debt, with an 80 percent chance of recovery?

At what price and yield would you pay for that ten million of bad debt junior to that senior tranch, but with priority over any other tranches down the line?

Now u understand financial engineering!

Tue, 11/15/2011 - 21:23 | 1881070 Rich_Lather
Rich_Lather's picture

JPM may know something you don't. What are our Congress critters up to now?

Tue, 11/15/2011 - 22:05 | 1881178 Mugatu
Mugatu's picture

The concept is easily understood, but the big fly in the ointment is that this is like buying a very old used car.  Who usually has the best idea of the true value of the used car - the seller that's who!  He knows if he is selling a dud for a good price because he drove the piece of shit for 100,000 miles.  The buyer gets screwed most of the time.

Same thing here.  This time, the guy selling you the used shit box is JPM.  

Tue, 11/15/2011 - 18:49 | 1880685 epwpixieq-1
epwpixieq-1's picture

No problem on high level languages but go to the low ones and you get a core dump! Surprise, Surprise :)

Tue, 11/15/2011 - 19:41 | 1880858 Stack Trace
Stack Trace's picture

// small C# method to express the situation more clearly!

// Remember to check the ref value after calling this function. Always returns True and an undesirable result will be loaded into billToTaxPayer

public bool IsTaxPayerFucked(List<Mortgage> mortgages, ref int64 billToTaxPayer)


bool isTaxPayerFucked = true;

int theBillToTaxPayers = 0;



foreach(Mortgage mortgage in mortgages)


if(mortgage.getPayment() == null)


theBillToTaxPayers += mortgage.Balance + JPM.Fees;




theBillTotaxPayers = int64.MaxValue;

throw new AccountingCorruptedException();






catch(Exception ex)


isTaxPayerFucked = true;




isTaxPayerFucked = true;


return isTaxPayerFucked;


Tue, 11/15/2011 - 21:17 | 1881057 TheFourthStooge-ing
TheFourthStooge-ing's picture

perl -e 'print "Taxpayer is fucking fucked, bigtime!\n"'


Tue, 11/15/2011 - 22:09 | 1881192 New_Meat
New_Meat's picture


Tue, 11/15/2011 - 19:43 | 1880862 SRVDisciple
SRVDisciple's picture

This is just a variant of the old Basic Computer Language statement "10 GOTO 10" except they added a few steps:

10 GOTO 20

20 GOTO 30

30 GOTO 40

40 GOTO 10

See, I'm productively writing more lines of code and my computer is just humming along.

Tue, 11/15/2011 - 20:50 | 1881006 RockyRacoon
RockyRacoon's picture

You got one smokin' CPU!

Tue, 11/15/2011 - 20:19 | 1880947 Carlyle Groupie
Carlyle Groupie's picture

WTF! Hey can you dudes debug my code. I cannot compile!

for( i=0; i<= tyler_posts_a_technical_reference; i++)

Tue, 11/15/2011 - 22:10 | 1881194 New_Meat
New_Meat's picture


Tue, 11/15/2011 - 22:52 | 1881333 TheFourthStooge-ing
TheFourthStooge-ing's picture

You're having a problem with trying to use an object to reference itself.


Wed, 11/16/2011 - 00:07 | 1881561 Stack Trace
Stack Trace's picture


Wed, 11/16/2011 - 06:48 | 1881934 Carlyle Groupie
Carlyle Groupie's picture


Tue, 11/15/2011 - 17:29 | 1880301 truont
truont's picture


CMBS Backed by defaults = "Sack 'o sh!t loans" ^ 2

Tue, 11/15/2011 - 17:32 | 1880311 eatthebanksters
eatthebanksters's picture

They are trying to figure out what their shit is worth....they are sitting on so much of it that they are trying to find an exit strategy which gives them the highest return...foreclosing and selling the properties are not an option, they can't distort the value of a building to look like its worth more than it is like they can with a synthetic can be sure that they will be the fuckors in the end and that the poor sod's who buy this shit will be the fuckees.

Tue, 11/15/2011 - 19:09 | 1880763 TheFourthStooge-ing
TheFourthStooge-ing's picture

They are trying to figure out how to get people to pay them for leaving a burning bag of dog shit at the front door, ringing the doorbell, and running away.


Wed, 11/16/2011 - 03:53 | 1881872 BorisTheBlade
BorisTheBlade's picture

Their task is more complex: present dog shit as AAA structured financial instrument backed by a pile of burning dog shit that yields flowers and sell it to the willing buyers. It takes a lot of MBAs and CFAs on both sell and buy side to make this structure work and create appearance of something noble and useful happening.

Tue, 11/15/2011 - 18:01 | 1880434 chet
chet's picture

"Could anyone please explain this rationally?"

Sure they can!  Oh wait, "rationally"?  No.  No they can't.

Tue, 11/15/2011 - 18:32 | 1880567 NumberNone
NumberNone's picture

Sure...let me explain.  10 years ago I took a shower with Jerry Sandusky.  He told me all we were doing is 'horsing around'.  He just invited me again to another 'horsing around' party.   Why wouldn't I want to go back again? 

Same thing.  JP Morgan is Jerry Sandusky and they can't understand why everyone wouldn't line up for another good ass-raping/horsing around session (allegedly). 

Tue, 11/15/2011 - 18:17 | 1880513 Captain Kink
Captain Kink's picture

I assumed that it meant that they pursue the settlement of these bad debts.  Pay 50 cents on the dollar, recover 70 cents--damn! just made 40%.  it's like a colection agent buying your debts of $1000 for $500 who then calls you and settles with you for $700.

Tue, 11/15/2011 - 18:52 | 1880702 iinthesky
iinthesky's picture

Actually its more like a collection agent buys your fake debt of 1000 bernak bux for about 10 dollars and tries to collect 1200$ for the interest, you know... Collection attorneys are bottom of the barrel scum who prey on ignorant people and business is good today.

Tue, 11/15/2011 - 20:50 | 1881002 topcallingtroll
topcallingtroll's picture

Somebody has to be the vulture and eat up the putrid mess. It is the cycle of life and finance.

Vultures or at least organisms that eat dead organisms are necessary.

Tue, 11/15/2011 - 21:09 | 1881044 palmereldritch
palmereldritch's picture

“Hey everyone, look at me, I’m a cowboy! Howdy, Howdy, Howdy!”


Tue, 11/15/2011 - 19:00 | 1880722 epwpixieq-1
epwpixieq-1's picture

And after that, whoever bought it for $700 will sell it for $300 (braineless investor) to the same money transfer people/sharks again. And they will sell it again for $500 and will make 66.66(6)% this time and so on and so on. Anyone see something wrong with this logic ???????? If you do you have an idea what is going on and you know what to do, if not continue playing according to the system rules, for this is the only thing left in your heads.

Tue, 11/15/2011 - 19:25 | 1880817 ArkansasAngie
ArkansasAngie's picture

The problem is that because the loans have not been handled properly the loans aren't actually secured. I sure as heck wouldn't give'm anything more than pennies on the dollar. Seriously ... 6% ... maybe 8%.

What you bet there is a hold harmless clause in there regarding mortgage origination and servicing irregularities.

And to think our government thinks these are the guys we should be paying billions to.

What a crock of odoriferous material.


Tue, 11/15/2011 - 19:51 | 1880884 trav7777
trav7777's picture

yeah, recover, they will actually have to foreclose and then SELL...aka, let the market clear

Tue, 11/15/2011 - 19:07 | 1880755 SHEEPFUKKER

It's pretty easy........shit backed by shit leveraged up with shit. 

Tue, 11/15/2011 - 20:13 | 1880932 Rainman
Rainman's picture

aka....a bucket shop

Tue, 11/15/2011 - 20:50 | 1881001 midtowng
midtowng's picture

I'm curious who would buy the stuff? And why?

Tue, 11/15/2011 - 20:57 | 1881020 Carlyle Groupie
Carlyle Groupie's picture


Why? Keeps the party going.

Tue, 11/15/2011 - 22:11 | 1881197 manodedios
manodedios's picture

and what are these loans going to be called: "E-N-R-O-N"?

Tue, 11/15/2011 - 23:38 | 1881492 CompassionateFascist
CompassionateFascist's picture

Ben would do it.

Wed, 11/16/2011 - 00:36 | 1881636 fourchan
fourchan's picture

jpm devides by zero

Tue, 11/15/2011 - 16:43 | 1880144 AccreditedEYE
AccreditedEYE's picture

This has "Retail Mutual Fund" written all over it...  

Tue, 11/15/2011 - 17:16 | 1880245 hedgeless_horseman
hedgeless_horseman's picture



...right next to government pensions. 

Paging all CALPERS portfolio managers...please come to a JPM all-you-can-eat dog-and-pony luncheon.

" achieve the highest possible return at an acceptable level of risk."

That is a BINGO!!! 

Tue, 11/15/2011 - 18:43 | 1880665 TheFourthStooge-ing
TheFourthStooge-ing's picture

As a dog returns to his vomit, so a fool repeats his folly.


Tue, 11/15/2011 - 21:53 | 1881152 Iam_Silverman
Iam_Silverman's picture

Has Leo seen this?

Could be even better than Chinese Solars!

Tue, 11/15/2011 - 17:11 | 1880247 I am more equal...
I am more equal than others's picture

Putting the 'BS' back into the CMBS market. 

Tue, 11/15/2011 - 16:49 | 1880175 fonzanoon
fonzanoon's picture

I don't know but the fight club scene about Brad Pitt explaining how the expensive soap he is selling woman is basically him selling their own fat asses back to them really seems to apply in this situation especially on this site.

Tue, 11/15/2011 - 16:58 | 1880201 Vergeltung
Vergeltung's picture

well played sir!


Tue, 11/15/2011 - 20:25 | 1880955 oddjob
oddjob's picture

The kartrashians could have their own brand of bar soap. The benefits of scale with that herd is enormous.

Tue, 11/15/2011 - 17:02 | 1880221 MeanReversion
MeanReversion's picture

Enforceability is not really an issue.  NPL (Non-performing loan) securitizations have been around for a very long time.  In fact they were popular in places like Italy and Germany.  The only question in my mind is whether the rating agencies have learned their lessons.  There's no real benchmark for rating defaulted CMBS, especially if the loans are large and non-granular.  You also have jurisdictional issues and complex legal issues, but enforceability is likely the least of the problems with this.

To wit, I'd be shocked if JPM, even if they were able to get this pile of manure rated in part, was able to place this paper with anyone.

Tue, 11/15/2011 - 17:41 | 1880343 MacGruber
MacGruber's picture

The rating doesn't really matter; this is just a vehicle for the Fed to assume more bullshit from the banks. Instead of going through all the trouble of trying to figure out how to assume bad loans straigh off the books the banks they are creating an intermediary security "instrument" so that the Fed doesn't have to change charter.


But really there is nothing new here. It's just more yachts and champagne for the bankers while the rest of us roll around in our own filth (underwater loans, high unemployment, etc). All of it is legal and done right in front of everyone.

It's not hubris on the part of the malefactor if the observer is too stupid to understand or apathetic to do anything about it. 


Tue, 11/15/2011 - 19:36 | 1880847 NotApplicable
NotApplicable's picture

Ding, Ding, Ding! Winnah!

You just know they wouldn't cook this up if there wasn't somebody waiting at the table with deeeeep pockets.

I expect to see this play out over and over, as bad "assets" are repackaged into something new in order to extend the con yet another day.

Tue, 11/15/2011 - 20:02 | 1880913 olo - that's th...
olo - that&#039;s the bird's picture

Think we'll ever get a chance to own an italian or spanish vila for a buck?

Tue, 11/15/2011 - 17:45 | 1880359 Sancho Ponzi
Sancho Ponzi's picture

'To wit, I'd be shocked if JPM, even if they were able to get this pile of manure rated in part, was able to place this paper with anyone.'

Bernanke may consider these CMBS tranches 'investment grade', if JPM instructs him to do so.  

Tue, 11/15/2011 - 18:20 | 1880529 cantankerous
cantankerous's picture

LNR will take the B and unrated pieces, assign themselves as special servicer and churn fees on this shit for years. If JPM gets the pricing of the tranches correct, they will attract buyer, and the waterfall cash flows generated through LNR's (and other efforts) will come from discounted pay-offs, foreclosure sales and loan payments once these NP's are brought into the realm ofperformace through some type of modification/forebearance.  

Tue, 11/15/2011 - 18:20 | 1880530 cantankerous
cantankerous's picture

LNR will take the B and unrated pieces, assign themselves as special servicer and churn fees on this shit for years. If JPM gets the pricing of the tranches correct, they will attract buyer, and the waterfall cash flows generated through LNR's (and other efforts) will come from discounted pay-offs, foreclosure sales and loan payments once these NP's are brought into the realm ofperformace through some type of modification/forebearance.  

Tue, 11/15/2011 - 17:08 | 1880241 slaughterer
slaughterer's picture

This has "desperation" written all over it.  Ask Dr. Michael Burry what he thinks of it.  I will only buy if the Fed backs up the CMBSs.

Tue, 11/15/2011 - 19:40 | 1880856 J 457
J 457's picture

He would probably be thinking about where to buy the CDS against it...

Tue, 11/15/2011 - 17:13 | 1880253 willien1derland
willien1derland's picture

@MadMax - The Prospectus will be identical to Goldman Sach's Timberwolf & Abacus deals - all references to Timberwolf & Abacus redacted & the name of JPM's offering inserted - Hedge with CDS from AIG - Repeat as necessary -


Tue, 11/15/2011 - 19:22 | 1880805 HedgeAccordingly
HedgeAccordingly's picture

Focus on chicks! - 

Tue, 11/15/2011 - 19:24 | 1880814 Quantum Nucleonics
Quantum Nucleonics's picture

CMBS is commercial real estate loans, not residential.  Commercial real estate might be deeply underwater crap, but, generally speaking, the loan documentation is night and day compared to residential mortgage docs.


All the prospectus has to say is, "Hey, at least these things aren't stuffed with performing European sovereign debt."


This really shouldn't come as a surprise.  The crediit crisis had hardly started in 2008 before people were setting up vulture funds to pick up defaulted assests on the cheap.  It mostly didn't play out that way since the banks mostly have played extend and pretend.

Tue, 11/15/2011 - 19:34 | 1880838 J 457
J 457's picture

So, for those of you with $$resources, instead of all these questions about how JPM can do this, shouldn't you be asking who and how you can buy a CDS against the CMBS?  Maybe its a Zion and/or Greenlight type repeat/opportunity, but on a commercial RE scale. 

Tue, 11/15/2011 - 21:40 | 1880951 philipat
philipat's picture

There will be two tranches. The top AAA tranche (As rated by S&P and Moody) will be backed by a bridge in New York.

Tue, 11/15/2011 - 21:48 | 1881133 Imminent Crucible
Imminent Crucible's picture

What no one is asking is "Hey, Jamie! How long ya had them there distressed loan pools that ya got from them dodgy Yoo-Ropeein banks? Was you on vacation in Italy last week and picked em up?"

No. I don't think so. I think this is EuroCrap that's been on the Morgue's books for quite some time---and is further evidence of massive un-reported exposure to Eurocalypse.

By the way, Dow Jones is incorrect. JPM packed up defaulted mortgage pools into MBS and sold them to the Fed in 2009. I can't prove it, but I'm pretty certain that all the Too Big To Jail banks unloaded a bunch of their defaulted crap this way while the Fed was expanding its balance sheet with innumerable liquidity facilities at a feverish pace.

Hey, they couldn't be expected to really assess all that "collateral" in real time, could they? Not while Goldman Sachs was hitting the PDCF 84 times for more than $600 billion?

Wed, 11/16/2011 - 00:23 | 1881603 e-man
e-man's picture

Wait a minute.  I don't think ZH read the fine print.  JPM is selling these in the bathroom tissue aisle.

Tue, 11/15/2011 - 16:39 | 1880126 Mad Max
Mad Max's picture

This would also seem to portend a tidal wave of new foreclosures and actions for deficiency judgments.  And a fair chance of Congress doing something blatantly unconstitutional to save the banks from the defective property title scandal that they created.

Tue, 11/15/2011 - 16:43 | 1880142 11b40
11b40's picture

These are COMMERCIAL loans, not residential.  Maybe I missed it, but not aware of any substantial title problems on CRE.

Tue, 11/15/2011 - 16:46 | 1880157 LawsofPhysics
LawsofPhysics's picture

Of course not, most of it is controlled by TPTB.  Most is owned outright, now the "valuation" is another thing altogether.

Tue, 11/15/2011 - 18:01 | 1880431 I am more equal...
I am more equal than others's picture

You are right - valuations are the issue.  A 100 bp change cause a 7% change in value.  When interest rates get back to normative - reversion to the mean - this pile of crap will become crappier. 

Dig in boys!

Tue, 11/15/2011 - 19:14 | 1880783 jm
jm's picture

The underlying *ahem* "stuff" could well be floating rate notes and the cashflow on the structure the same. 

This may well be priced as a distressed debt vehicle-- pure play on recovery-- or a vehicle to facilitate forebearance to improve performance.  The latter is a time-honored part and parcel of capitalism. 

Tue, 11/15/2011 - 16:52 | 1880185 Mad Max
Mad Max's picture

Somehow I overlooked that this was commercial loans rather than residential.  Yes, that probably makes a big difference.  I'm still curious what the offering documents would say about title and enforceability though.

Tue, 11/15/2011 - 21:45 | 1881123 Carlyle Groupie
Carlyle Groupie's picture

"title and enforceability"

Not as much of an issue with CMBS and CDO's.

A lot of CMBS has technically defaulted and banks have allowed owners to continue managing the assets while tacking the principal and interest on the end of the instrument as a balloon or addition to existing balloons.

Lots of toxic shiz out there still waiting for the inflation gravy train. Caveat emptor.

Tue, 11/15/2011 - 16:46 | 1880160 Yardstick of Ci...
Yardstick of Civilization's picture

Get ready for a massive assault by banks to obtain deficiency judgments followed by sellling those judgments to collection agencies that will seize anything of value in satisfaction of the deficiencies.  That's the ony way those bonds will pay . . . . .

Can anyone suggest another country for me to move to with:

1. Beautiful women

2. Opportunities to invest capital for real growth

3. A system for establishing credit and obtaining business loans

4. Good beer

? ? ? ? 

If there is not one with good beer, then maybe I will start a brewery, but there MUST be beautiful women.

Tue, 11/15/2011 - 16:49 | 1880168 LawsofPhysics
LawsofPhysics's picture

Don't know about countries, you might want to try another planet.  Personally I have noticed that attractive women are always easy to find with a fat wallet.

Tue, 11/15/2011 - 16:49 | 1880174 junkyardjack
junkyardjack's picture

HAHAHA A system for establishing credit and obtaining business loans.  Thanks I needed that

Tue, 11/15/2011 - 16:50 | 1880176 toytoy0303
toytoy0303's picture



Tue, 11/15/2011 - 16:50 | 1880179 Cyrano de Bivouac
Cyrano de Bivouac's picture

I would say Singapore or Hong Kong.

Tue, 11/15/2011 - 16:51 | 1880182 Mad Max
Mad Max's picture

Try Uruguay.  Hope the neighbors don't start coveting your country though.

Tue, 11/15/2011 - 17:02 | 1880225 youngman
youngman's picture

Colombia.....I live there

Tue, 11/15/2011 - 17:22 | 1880276 koperniuk666
koperniuk666's picture

well my mum USED to be beautiful


and she SMELLS of beer...


So you could try the UK??

Tue, 11/15/2011 - 17:36 | 1880325 CORNGUY
CORNGUY's picture

I would say your only hope is moving out to sea, in international waters.    You can choose which beautiful women come with you and you dont have to answer to any government.    You may want to put a small distilery on as well.   Too bad we can't do it yet.......

Tue, 11/15/2011 - 17:53 | 1880387 koperniuk666
koperniuk666's picture

great idea - i got a boat for sale

its up for 2.25m but will take a dozen JPM CMBS or 10,000 bog rolls

please send SERIOUS offers to my new PA;


Tue, 11/15/2011 - 19:03 | 1880742 CharlieSDT
CharlieSDT's picture

Check out our blog, this is pretty much our main topic.

Tue, 11/15/2011 - 19:34 | 1880839 Ag1761
Ag1761's picture



1. Check

2. Check

3. Check

4. Well, goats milk is ok chilled

Tue, 11/15/2011 - 19:51 | 1880881 Phil Free
Phil Free's picture

Wouldn't advise that -- because when Iran finishes their nukes and fires a nuke at Israel, all those pretty nukes Israel has on their 3 nuclear submaries will go airborne, and Iran will become a nice, glass parking lot -- and glass parking lots are not conductive to the brewing of good beer.

Tue, 11/15/2011 - 21:55 | 1881163 Imminent Crucible
Imminent Crucible's picture

Mexico qualifies, with a few caveats:

1. Plenty of beautiful women, but they're all under 19. Older than that, they get fat.

2. Investing opportunities are good with La Familia or El Chapo. I'd stay away from the Zetas.

3. They have a system for establishing credit and getting business loans, but it requires that you come from, or marry into, a wealthy Mexican family.

4. Good beer...sorry, no. Everything from Mexico tastes like Bud Light, except Negra Modelo or Bohemia, which are like watered-down doppelbock, but otherwise not too bad.

Tue, 11/15/2011 - 21:59 | 1881169 emunah73
emunah73's picture

I know such a country - Poland

1. beautiful women - sure, plenty of

2. lots of opportunities for investment

3. it depends on your business plan

4. Beer is very good

Tue, 11/15/2011 - 16:39 | 1880127 fuu
fuu's picture

I am guessing EJ is not one of the rating agencies.

Tue, 11/15/2011 - 16:59 | 1880207 rational
rational's picture

Your right, Sean Egan tried to build a securitization business but the shortseller-paid model doesn't really work there...

Tue, 11/15/2011 - 16:41 | 1880131 Global Hunter
Global Hunter's picture

So they offer them to the market at 15 cents on the dollar and get 85 cents (plus commissions and fees) from the US Taxpayer/Fed?

Tue, 11/15/2011 - 16:41 | 1880132 taraxias
taraxias's picture

Every time I think I see bottom, this rabbit hole keeps getting deeper.

Tue, 11/15/2011 - 17:15 | 1880257 earnulf
earnulf's picture

You might not be in a rabbit hole, what's that smell?

Tue, 11/15/2011 - 18:52 | 1880703 TheFourthStooge-ing
TheFourthStooge-ing's picture

This deal smells so ripe that I doubt if even honeydippers would go near it.


Tue, 11/15/2011 - 17:30 | 1880306 koperniuk666
koperniuk666's picture

Buy a telescope - then you can look at Uranus.

Tue, 11/15/2011 - 19:53 | 1880889 Phil Free
Phil Free's picture

Those are called telescopes, now?

Tue, 11/15/2011 - 16:41 | 1880136 Mark123
Mark123's picture

Good thing we spanked those bankers hard....never again will they do something that puts the taxpayers at risk.

Tue, 11/15/2011 - 16:43 | 1880138 Mae Kadoodie
Mae Kadoodie's picture

I've got some good shit to sell.  No really, this shit is good..

Tue, 11/15/2011 - 16:43 | 1880139 TheLooza
TheLooza's picture

And for the people who want in on that, they should also look at my private label securitization.  Fantastic concept -- securities backed by cash flow from the Penn State kids summer camp program.  Money in the bank!

Tue, 11/15/2011 - 16:44 | 1880153 cocoablini
cocoablini's picture

Crack me up

Tue, 11/15/2011 - 17:16 | 1880265 seek
seek's picture

This actually happened to my parents for real back when Paine Webber existed, their account manager offering exclusive private investment opportunities. (He was gambling the cash in Vegas, and PW discretely fired his ass and made all the clients whole.)

Nowdays they'd give the guy a bonus and surcharge the accounts for conceierge-class service.

Tue, 11/15/2011 - 16:43 | 1880140 Cdad
Cdad's picture

Wow...gimmie three of ', make that five.

Tue, 11/15/2011 - 16:44 | 1880146 cocoablini
cocoablini's picture

Say whAt??
They are going to create a derivative security ( fake useless asset) using defaulted loans( source fake useless asset)? What TRANCHE is that? AAa?
The big issue about today's depression is that the banks have had unprecedented access to the creation of phoney assets and phoney asset values- so they can pimp their balance sheet and go to the casino tables and lose it all. This far outweighs the mild garbage the Treasury is pooping out.
It really is a pyramid scheme, all of it.
It's really time to hit the exits- just to punish the system

Tue, 11/15/2011 - 16:44 | 1880148 UGrev
UGrev's picture

Sums it up:

Excerpt from Monty Python and the Search for the Holy Grrrrrrrrail. 

Tue, 11/15/2011 - 16:59 | 1880206 a growing concern
a growing concern's picture

You can't expect to wield supreme executive power just 'cause some watery tart threw a sword at you

Tue, 11/15/2011 - 16:44 | 1880149 LawsofPhysics
LawsofPhysics's picture

Well that should excellerate paper's demise.

Tue, 11/15/2011 - 16:44 | 1880150 rational
rational's picture

@mad Max: These are COMMERCIAL MORTGAGES, so title issues etc, are beside the point, they are problems of the residential mortgage market.

Sales of defaulted loans to investors are fairly common and have been on-going in the crisis in the residential market (and privately in the CMBS market).  If you think you can analyze stressed recovery value on the propertiesm there is nothing too shocking here. 

Tue, 11/15/2011 - 16:54 | 1880195 Global Hunter
Global Hunter's picture

big MBS book...there was always a bid at every tick on the way down until there wasn't...then they sold the book as securities.

Tue, 11/15/2011 - 17:36 | 1880322 AbandonShip
AbandonShip's picture

right,  as long as there is a greater than zero percent chance of this thing producing cashflows, someone in Germany will buy it.

Tue, 11/15/2011 - 16:44 | 1880151 Global Hunter
Global Hunter's picture

Question 2, are people really that desperate for yield?  Who buys these?

Tue, 11/15/2011 - 17:34 | 1880318 AbandonShip
AbandonShip's picture


Tue, 11/15/2011 - 16:45 | 1880155 hannah
hannah's picture

if the usa doesnt have any money and we are printing thru QE, we are supporting new debt with old debt...there isnt any 'real' assets or money now. it cant be is this different...?

Tue, 11/15/2011 - 16:46 | 1880158 Theta_Burn
Theta_Burn's picture

Human adaptation and ingenuity at its best

The absurdity isn't the creation of yet another pile of shit but that there is a market for it

Honestly i was getting worried that the Europeons were on the verge of 1 upping us on the surreal

Game on



Tue, 11/15/2011 - 17:00 | 1880212 flattrader
flattrader's picture

>>>The absurdity isn't the creation of yet another pile of shit but that there is a market for it<<<

or that they "think" there is a market for it.

We shall see....

Tue, 11/15/2011 - 16:46 | 1880159 kito
kito's picture

isnt that called the efsf?

Tue, 11/15/2011 - 16:48 | 1880163 frugartarian
frugartarian's picture

desperation rising

Tue, 11/15/2011 - 17:39 | 1880336 Steaming_Wookie_Doo
Tue, 11/15/2011 - 16:48 | 1880164 Everybodys All ...
Everybodys All American's picture

If you can't raise capital ... you figure out a way to offload your cmBS.

Tue, 11/15/2011 - 16:48 | 1880165 Hugh_Jorgan
Hugh_Jorgan's picture

Not surprising, they are like a wounded animal about to be killed. They pull out ALL the stops. Every possible avenue will be explored down to the last straw. There is no shame...

Tue, 11/15/2011 - 16:49 | 1880169 css1971
css1971's picture

AAA is the new D.

Just ask Italy.


Tue, 11/15/2011 - 17:27 | 1880292 kito
kito's picture

i prefer bra-less DDD

Tue, 11/15/2011 - 16:49 | 1880171 cocoablini
cocoablini's picture

What's the basis of the cmb? The loan which was implied or the asset?
If they have defaults on it, then the title will go to the bank. This isn't an REIT, it's a CMBS that is based on the securitization of the loan as an asset- which is defaulted on. And they are going to write the prospectus for a bunch of idiots assuming they get the asset.

Tue, 11/15/2011 - 19:00 | 1880733 TheFourthStooge-ing
TheFourthStooge-ing's picture

They're only testing the water with this fraud heap. If this sells, their next step is securitizing corn in turds and passing it off as an ethanol play.


Tue, 11/15/2011 - 16:49 | 1880173 Sudden Debt
Sudden Debt's picture

If JPM goes down to 2$ I'm buying!

The reason is because JPM always made it through every crisis and is so interconnetec into the US powersystem, that it's a sure thing that they'll survice this crisis.


All the rest goes to Silver ;)


Tue, 11/15/2011 - 16:56 | 1880199 XitSam
XitSam's picture

I'd buy that for a dollar.

Tue, 11/15/2011 - 16:51 | 1880183 CvlDobd
CvlDobd's picture

Crazy day.

One of my worst in a while. 2 of my long stocks are down and 1 is unchanged. The ETF and stock I am short are both up.

I'd like to say Lol. I guess days like these happen.

Tue, 11/15/2011 - 19:49 | 1880874 Ponzi Unit
Ponzi Unit's picture

You're trading this market? You deserve what you get. Nanosecond by nanosecond.

Tue, 11/15/2011 - 16:52 | 1880184 alien-IQ
alien-IQ's picture

Sorry but No fuckin way. This shit can't be real.

Tue, 11/15/2011 - 16:52 | 1880186 junkyardjack
junkyardjack's picture

Don't spend your money too quick, in Q1 2012 I'm expecting to get my first issuance out of Bridge Backed Securities (BBS) backed by the Brooklyn Bridge.  I have a few other variations to roll out but I'll see how this one prices first to test the market.  

Tue, 11/15/2011 - 16:52 | 1880187 monopoly
monopoly's picture

Am with you Sudden, put me down for 20,000 shares at 2.00. Absured all, just freaking absurd. And so glad I have hardly touched my trading mouse for over a month. This market is insane. Like what I got. Shorts are getting killed now, not daily but hourly. Longs also. Miners and cash thank you very much.

Tue, 11/15/2011 - 17:10 | 1880244 sabra1
sabra1's picture

guys, don't go up to canada to drink, signs everywhere are written, "we don't serve miners!"

Tue, 11/15/2011 - 17:05 | 1880190 PersonalRespons...
PersonalResponsibility's picture

111011010010101010101011 Buffer Overflow

00000001 00000011 00000111 00001111 boogie


Tue, 11/15/2011 - 16:54 | 1880194 e-man
e-man's picture

If I buy them at 53 times leverage, can I convert to a bank holding company?

Tue, 11/15/2011 - 16:58 | 1880200 Global Hunter
Global Hunter's picture

only if you continue to pay a JPM desk for their "research" or agree to hold a certain percentage of your capital reserves in defaulted MBS

Tue, 11/15/2011 - 16:58 | 1880204 ZeroPoint
ZeroPoint's picture

The snake is eating its tail!

Tue, 11/15/2011 - 16:59 | 1880208 sabra1
sabra1's picture

does it come in a ETF? then i'm in, i think, NOT!!!!

Tue, 11/15/2011 - 17:00 | 1880211 TheLooza
TheLooza's picture


Tue, 11/15/2011 - 17:00 | 1880213 ziggy59
ziggy59's picture

Alchemy; American Style..

Tue, 11/15/2011 - 17:00 | 1880214 M.B. Drapier
M.B. Drapier's picture

It's the purest refinement of the securitisation model! The equity tranche comes pre-defaulted for your convenience.

Tue, 11/15/2011 - 17:00 | 1880215 monopoly
monopoly's picture

Trading this market is insane. I do not care how sharp you are. No way guys. No way.

Tue, 11/15/2011 - 17:01 | 1880219 firstdivision
firstdivision's picture

I would love to see these pitchbooks. 

Tue, 11/15/2011 - 17:02 | 1880222 Absalon
Absalon's picture

Distressed debt is a legitimate investment class.


At least this time investors are being up front they are buying garbage.

Tue, 11/15/2011 - 17:06 | 1880235 monopoly
monopoly's picture

Ab, you are correct. I have one company in our commercial building that has expanded 2 times in three years. They do distressed debt. Easy to find space for them as 2 other companies failed in same building.

Tue, 11/15/2011 - 17:02 | 1880224 monopoly
monopoly's picture

I have over 100 on my daily scan and 2, 2 stand out AAPL and PCLN everything else, why even bother to open the market.

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