God save the queen

24.02.2009 @ 17:23 \05\Tue, 24 Feb 2009 17:23:56 +0000\56 +0000 UTC

Mejor que salve a la Libra. Los países cuyos nombres empiezan con “i” no les está yendo bien. Inglaterra se está desplomando literalmente

The current mood in Great Britain is gloomy. Long Europe’s most successful economy, Britain’s fortunes have since plunged more than those of almost any other European country.

Unemployment is rising twice as fast as the European average. Two million people have already lost their jobs, a number that could rise to 3 million by the end of the year. According to the International Monetary Fund (IMF), the British economy will shrink by 2.8 percent in 2009, the greatest projected decline among the seven largest industrialized nations.

The unemployed are often forced to give up their apartments or homes because many are deeply in debt and can no longer afford to make their monthly mortgage payments. Someone in Great Britain loses his home once every seven minutes.

Ven? Después de todo que te bajen 5% de tu sueldo no suena tan mal.

Y todo por la culpa de un Chino. Sí, un amarillo tenía que ser. Se llama David X. Li y él “inventó” una fórmula que todo Wall Street usó para crear sus fancy financial instruments. El problema fue que, como siempre, nadie en Wall Street entendía la fórmula

For five years, Li’s formula, known as a Gaussian copula function, looked like an unambiguously positive breakthrough, a piece of financial technology that allowed hugely complex risks to be modeled with more ease and accuracy than ever before.

The effect on the securitization market was electric. Armed with Li’s formula, Wall Street’s quants saw a new world of possibilities. And the first thing they did was start creating a huge number of brand-new triple-A securities. Using Li’s copula approach meant that ratings agencies like Moody’s—or anybody wanting to model the risk of a tranche—no longer needed to puzzle over the underlying securities. All they needed was that correlation number, and out would come a rating telling them how safe or risky the tranche was.

As a result, just about anything could be bundled and turned into a triple-A bond—corporate bonds, bank loans, mortgage-backed securities, whatever you liked. The consequent pools were often known as collateralized debt obligations, or CDOs. You could tranche that pool and create a triple-A security even if none of the components were themselves triple-A. You could even take lower-rated tranches of other CDOs, put them in a pool, and tranche them—an instrument known as a CDO-squared, which at that point was so far removed from any actual underlying bond or loan or mortgage that no one really had a clue what it included. But it didn’t matter. All you needed was Li’s copula function.

Interesante no?

Pero vean, todo es cosa de confianza. Eso es lo que importa: la confianza. Como la confianza de los consumidores en USA, cuyo índice alcanzó su menor nivel de la historia. Yo creo que en México no se han enterado. El dólar anda en 15 pesos

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