Thursday, December 20, 2007

The Gory Details Behind the Credit Mess

If you like blood-n-gore human interest stories, you'll love this series of articles at Bloomberg. They tell the unfolding of the credit bubble with scripted detail, taking the cases of individuals from all across the spectrum of players and following them through this whole saga.

Halloween mask embroidery
[Thanks to emblibrary.com for this photo of an embroidered Halloween mask.]

The first story (at the bottom of the list) describes the scene way back in the beginning, where a "Group of Five" Wall Street brokers, working after-hours and snacking on Chinese food, hacked out the securitization and derivative deals that would eventually bring this playing-card castle down.

Then there's the sad story about Daniel Sadek, a has-been subprime mortgage broker in California, and one of his typical customers Christopher Aultman who still must face the piper in the months ahead.

There's J. Kyle Bass who saw it all coming toward the fan, and who was one of the few who has profited from it all. Putting your money where your mouth is is extremely difficult. A lot of us saw it coming; but how many of us had the guts to bet good hard cash on it? (Never mind someone else's good hard cash, in the billions.)

The fourth saga gives us a closer look at the rating agencies and the role they played in it all. Reminds me of the problems the big five auditing firms ran into with Enron not so long ago.

Fascinating stuff. And there will be more stories like these at the above-linked Bloomberg page as the days wear on.

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