Ward on Words

If you watched the Superbowl , you probably saw the Chrysler ad (AKA one of two Eminem Superbowl ads.) If not, you can watch it here  on YouTube.  Beautifully filmed, beautifully edited, it's a love song to Detroit. Told by Eminem. And it starts with a question: What does this city know about luxury? And I've got some stats that indicate the answer would be "not much." The lead in a 2009 Wall Street Journal story goes like this: They call this the Motor City, but you have to leave town to buy a Chrysler or a Jeep. The Journal goes on to note that Borders had just closed its last Detroit store, and that Starbucks, "known for saturating U.S. cities with its storefronts, has only four left in this city of 900,000 after closures last summer." The story then points out that there are no national grocery stores in Detroit. That was then, in 2009. What about now? Well, the good news is that unemployment decreased in 2010 (according to preliminary d...

I will be the first to admit that I am a CDO ignoramus. After a year of research, I still can't figure out how collateralized debt obligations work or why we need them. What I find mystifying is the opacity of the offering. And from what I understand, we have not only CDOs that we can buy, but synthetic CDOs, which, as far as I can tell, function as a sellable mirage of the original CDO, which is itself a bunch of debt lumped into various tranches of different risk classes. But apparently we need this kind of innovation - regulations for the financial sector would squash this kind of innovation, so we're told, and then the market for Ferraris would drop significantly. (JUST KIDDING about those Ferraris!) In my search for knowledge, I find myself exploring all sorts of econ blogs - enjoying the journey while remaining mystified by the CDO conundrum. So I read with interest the latest post on the Economics of Contempt blog - " On Goldman and synthetic CDOs." ...