"The 'real money' (U.S. insurance companies, pension funds, etc) stopped buying subprime mezzanine debt in late 2003 and they needed a mechanism to 'mark up' these loans, package them opaquely, and export the newly packaged risk to unwitting buyers in Asia and central Europe. The CDOs were the only way to get rid of the riskiest tranches of subprime."
"These buyers (mainland Chinese banks, the Chinese government, Taiwanese banks, Korean banks, German banks, French banks, UK banks) possess the 'excess' pools of liquidity around the globe. They have had a virtually insatiable demand for U.S. dollar denominated assets.......until now."
"This [converting toxic waste into AAA grade debt] will go down as one of the biggest financial illusions of all time. The ensuing HORROR SHOW will be worth the price of admission."
from letter to limited partners of one of the best performing hedge funds
(200% + ) this year.
