Bailout 12: Lone Star Transaction
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Uploaded by khanacademy on Oct 1, 2008
A real life example of a transaction involving CDOs.
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@draggeddownthehole Ha ha good analogy!
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@wmanger You should check out the Chinese real estate market. The same exact thing that happened in Japan and the US is happening in China now, too. Plus I feel like the European crisis right now is also based on real estate crash.
*shakes head* It seems that people never learn.
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@mavisrain Here's a crazy idea for you to wrap your head around. You ever tried to ask yourself what if Lone Star was just one of the hundred subsidiaries Merill Lynch can bring into existence at any point in time with the snap of a finger? Mind boggling huh?
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I think Lone Star truly believed that those assets were worth more than $6.7 billion, since if the S.P.E fails to get back more than $6.7 billion after selling out all the assets the major victims will be Lone Star themselves. and I don't think Lone Star guys are naive enough not to take it into consideration. They don't want to lose their $1.7billion. maybe they just lacked cash.
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I dont understand completely. If the assets are worth nothing (if they default) wont meryll lynch be out 5 billion that they loaned?
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Does anyone know where Sal got this article?
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The Mighty Khan = Legend!
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Anyone care to bet that the commission for this deal was paid using the $30 BILLION notional value. I bet the criminal Bankers gave themselves a $30 MILLION bonus on this deal.
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That is legendary..haha
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Excellent!!
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Dude, you rock!! With this live-on case, all the previous lectures culminated so well. Please take up some more of these so called real life cases and explain it to us. When you took this case, it seemed so obvious, which otherwise is some crap to me n i don't care abt it. Keep up the gr8 work. you are truly inspiratonal.
clovermintblue 2 years ago 9
Ingenious presentation!!!
abab676 2 years ago 6