And you are here why?

And now you know everything you need to know. And are the sadder for it :-(

Dan McCrum of FT Alphaville looks at the history of a Countrywide mortgage - read " looks at the sordid history of a crap mortgage bundled by Countrywide into a CDS, and then flushed through the sewer pipes of the collaterization industry ). Its pretty short, but fairly horrific anyhow, replete with fun stuff like Countrywide spends 2007 struggling to raise funding, and ends up in the hands of Bank of America for $4bn in stock. Two weeks before Lehman Bothers files for bankruptcy in September 2008, Mr & Mrs Nadeau miss their first mortgage payment. On October 9, 2008, with due sense of timing, Moody’s downgrades 717 securities related to 71 bundles of subprime mortgages issued by Countrywide. Among them is CWABS 06-6 2-A-3, which drops a notch. A month later the Fed creates Maiden Lane II, which buys a portfolio of mortgage backed securities as part of the bail out of failing insurer AIG for $19.5bn, a little over half of their notional...

Barry Ritholz wigs out - understandably - about Credit Default Swaps , and how they should not be treated as Yet Another Tradeable Asset, but should instead be regulated as insurance products. Whats the difference? A Tradeable Asset , usually, doesnt require you to reserve any money against future claims - I sold you the apple, you bought the apple and that is that.  Insurance products , by definition, do require you to reserve money -  you're basically betting against an event happening, but you need to reserve some money in the off-chance that it does occur and you need to shell out cash. But, thanks to Phil Gramm (responsible for almost as much financial chaos as Greenspan), CDS are now treated as Tradeable assets.  Take it away Barry... Our story thus far :  The   Commodity Futures Modernization Act of 2000 , sponsored by Texas Senator Phil Gramm as a favor to his wife Wendy (who sat on the Board of Directors of Enron,  which wanted to tr...