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> I can't believe people have already forgotten what CDO has done to this economy. Collateralized Debt Obligations - every word in the acronym screams credit.
by hectorr1 9y ago
> I can't believe people have already forgotten what CDO has done to this economy.
Collateralized Debt Obligations - every word in the acronym screams credit. A CDO is an instrument that guarantees you a cash flow based on debt. A guarantee for you is an obligation for someone else. Chains of these guarantees and obligations is what enabled the housing bubble. The breaking of these chains caused the Great Recession.
As far as we know, the crypto bubble is not highly leveraged. One Bitcoin is worth one Bitcoin. It could trade for $1 or $1 million, but you are never obligated to take the offered price as a buyer or seller. Yes, it's complex. But it is technically complex, not relationships-obligations complex.
- thkim 9y agoyou're thinking leverage is only way to pose a system risk to economy. it is not. leverage amplifies the risk, but just because there is no leverage that does not mean risk is not exposed to the system. when consumption goes down, business gets affected.