On Dec 13, 2007 5:35 PM, Sandwichman <[EMAIL PROTECTED]> wrote: > What I want to know is can you make soup out of worthless financial assets? > If you can, what is the recipe? If you can't, why bother talking about the > credit crises?
Sure you can. 1) Take Worthless Financial Assets (WFA) par value $10.00, default risk 90%. 2) Borrow $10.00 from friend. 3) Buy 9 WFAs from your college buddy who runs a hedge fund for $9.00. 4) Combine the 10 worthless financial assets and split them up into 5 tranches. 5) Pay Moody's $1.00 to rate highest tranche at AA par value $20.00. 6) Create SIV with AA tranche as only asset. 7) SIV goes to Fed discount window and borrows $11.29 and gives you a special dividend. 8) Return $10.00 to friend. 9) Buy soup for $1.29 from Sandwichman. -raghu.
