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The AAO Weblog covers accounting issues and current events as they relate the practice of investment analysis.

Nov 29

Written by: Jack Ciesielski
11/29/2007 8:22 AM 

EITF meeting today - not much time to write, but a couple of things for you to consider that you might not have noticed.

First, an excellent description of the above-named securities in a speech by Erik Sirri , the SEC's director of the Division of Trading and Markets. Erik explains the "concentration-despite-diversification" present in these creations, how they dissolved, and makes a couple of not so bold predictions, which are probably dead right. Like this one:

"I'm enough of a historian to know that, some number of years down the road, we or our successors likely will again be commenting on why some other product or business led to large and unexpected losses. But it will probably not be super senior ABS CDO."

Anyway, it's a good read, with more technical description of what goes on in making these things - and their markets - than you'll read in the mainstream financial press.

And there's also a very British view of the way these things work, courtesy of YouTube.




Stiff upper lip, and all that. This one has been making the rounds: I first spotted it in TheCorporateCounsel.net blog , who had gotten it from Kevin LaCroix. And I've received it from friends by e-mail too. Enjoy.