The middle men

To further the cause of Man in a Shed trying to figure out persistence mechanisms with ATL and COM today's post is another blog recommendation - The Daily Reckoning (again), currently MiaS's favourite horseman of the Apocalypse (Financial that it ).

This post contains such wonderful stuff as:

Before pulling the trigger, the judge was curious… a curiosity shared by millions, no doubt. He wanted to crack open a sophisticated derivative product – a mortgage backed security – and find out what was in it. In the event, he discovered that something was missing; structured finance was not structured quite as well as it pretended to be.

..... go to the post to see how this turns out ...

It also contains the following analysis, which when the politicians get round to trying to understand the credit crunch may yet have serious political implications - think about it:

"The mortgage companies earned fees by lending money to people who couldn’t pay it back. Then, the lenders shrewdly sold the mortgages on to Wall Street firms who bundled them up and turned them into tradable securities, backed by complex mathematical models that showed what they were supposed to be worth. These were then rated by companies such as Fitch and Moodys – again for fees – and sold on to people who didn’t know what was in them, generating more rich bonuses for the financiers. That was the beauty of securitized debt; the money was made in the middle, while the trouble was pushed out to both ends." (emphasis mine ).

But all tells the story of how Deutsche Bank found out that hard way it had less than it thought on 14 mortgages in the US. (In MiaS brief former career in Drilling this is know as a Oh **** moment).

PS If I was a left wing socialist - I would be making a lot of noise about all this - so why are they so quiet ? Could the answer be the closeness of Gordon Brown to certain parts of the city ?