Business Intelligence

Why The Market Went South

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Executive Summary

On the screen was an impossibly complex web, nearly black with entanglements, under the title "Collateralized debt obligations," the now-infamous asset-backed security that many consider a principal culprit in the recent global liquidity crisis. Citing CDOs as a key cause of the financial crisis, Rebelo pointed to the repackaging of debt - including many home loans - into so-called "Toxic assets" that banks could not sell. As a result, a strategy initially designed to distribute and thereby minimize risk ended up increasing it instead.

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