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In case I'm not the only one that didn't immediately understand CDO the unexplained acronym - my guess is "collateralized debt obligation" based on multiple use

In case I'm not the only one that didn't immediately understand CDO the unexplained acronym - my guess is "collateralized debt obligation" based on multiple uses of collateralized in the post. https://en.wikipedia.org/wiki/Collateralized_debt_obligation https://en.wikipedia.org/wiki/Collateralized_debt_obligation My first guess was "chief data officer".

cbsmith 3y ago
I just realized there's a whole generation of people young enough that they weren't reading headlines back when CDOs destroyed the world's economy. I feel old.
- lanstin 3y ago
  I came of age during the S and L crisis. Been alternating between increasing prosperity, magical technology, idiotic wars kept going by the side that wants might makes right against the side of people that want an ordinary and beautiful life, and scam based economic collapses, against a backdrop steady worsening of global warming and global biodiversity ever since. Most fascinating life, I hope my kids enjoy their time half as much as I have. Not without problems, but the people, the learning, the flowers, the maths and the holding hands, hard to imagine better, if we’d just get out of our own way.
- jasonjmcghee 3y ago
  Embarrassingly, was certainly old enough to be reading those same headlines / being familiar with housing crisis, guess I'm just not an acronym person.
  - zem 3y ago
    same here, I remember the story and the concept but not the term
    - cbsmith 3y ago
      I really appreciate the effort you guys are going through to make me not feel so old. ;-)
VHRanger 3y ago
The analogy here is that the CDO is a financial product that's built from other debts. Specifically, it was a piece of partial ownership on a bunch of mortgages in 2008. The issue here is that when the junk mortgages defaulted, the CDO also went sideways [1] In any case, what the author is thinking about is more "systemic risk" (think leftpad or cascading DNS failures) rather than debt-based analogies. One big reason 2008 became such a big mess was the systemic issues, not building products on debt [2] 1. Fun fact - before 2008, they had started making CDOs out of CDOs because of of the insatiable appetite for mortgage-backed financial products. When mortgages are underwritten for people withouth a job, and packaged in a product with a AAA credit rating, it turns out it's a profitable thing to sell. 2. Also the fact that Lehman and Bear Sterns had leverage ratios in the 30x-40x range, which is insane.
- deleted 3y ago
  [deleted]
layer8 3y ago
I was thinking of https://en.wikipedia.org/wiki/Collaboration_Data_Objects https://en.wikipedia.org/wiki/Collaboration_Data_Objects. ;)
xeromal 3y ago
You gotta watch The Big Short. That's where I learned what a CDO was
- Ekaros 3y ago
  I also recommend Margin Call... Then again, I need to put some more thought in analogy where dumping all of it to unsuspecting people would work here...
  - xeromal 3y ago
    I love Margin Call. Jeremy Irons is so good!
- jasonjmcghee 3y ago
  Great movie- but didn't remember this acronym.
  - jfoutz 3y ago
    I think they make a joke out of the explanation. Iirc, Margot Robbie explains it, while taking a bath.
bunnie 3y ago
Correct, with the implication that by creating incentives to bundle junk tech debt into 'AAA' packages (packages with good reputation), the Rust ecosystem is heading for a bubble (and eventually a collapse) because the rating agency that's supposed to regulate things has been gamed.
- mwcampbell 3y ago
  Do you think that implication is correct? If so, how do we fix it? Of course, companies should pay for what they use, but how do we practically implement that?
  - jahewson 3y ago
    Great question. One thing to remember is that the value of a piece of software that’s heading towards being un-maintained is much lower than one that has a clear maintenance path. One should be wary of single-maintainer projects. That said, the number of maintainers and the amount of code per maintainer would seem to be the important variables. In this case the code has moved from a repo with one (albeit absent) maintainer to another with one maintainer. Let’s call that neutral. However our new maintainer now has much more code to maintain so the risk has measurably gone up. It might be worth also taking into account how much code in total someone is responsible for across the cargo ecosystem.
  - bunnie 3y ago
    I feel like the analogy does not quite hold because when the junk debt was vendored in, the maintainer actually has more knobs than before to fix the problems - and if it's as easy as bumping some dependencies and fixing a few method signatures, it might actually happen. Whereas in the 2018 crisis, junk debt was rolled into CDOs but there were no 'knobs' the bankers could turn to actually improve the fundamentals of the junk debt. By repackaging the debt they did not get any right to fix the bad actors that made it bad. Things were actually bad, and when it defaulted there was insufficient firewall to prevent the contagion from affecting the encapsulating derivative. Of course it is up to the maintainer but by absorbing an abandoned project, they are actually reducing the amount of unmaintained code, versus simply hiding it. Probably the more accurate analogy to 2018 would be if a private equity firm started a company you could pay to upgrade the rating of an unmaintained Rust package, but no actual change happened and all they did was swap labels on things until the problematic rating disappeared.
m463 3y ago
with 3 XOR operations, I could optimize those Code Default Swaps.

cbsmith 3y ago

I just realized there's a whole generation of people young enough that they weren't reading headlines back when CDOs destroyed the world's economy. I feel old.

lanstin 3y ago
I came of age during the S and L crisis. Been alternating between increasing prosperity, magical technology, idiotic wars kept going by the side that wants might makes right against the side of people that want an ordinary and beautiful life, and scam based economic collapses, against a backdrop steady worsening of global warming and global biodiversity ever since. Most fascinating life, I hope my kids enjoy their time half as much as I have. Not without problems, but the people, the learning, the flowers, the maths and the holding hands, hard to imagine better, if we’d just get out of our own way.
jasonjmcghee 3y ago
Embarrassingly, was certainly old enough to be reading those same headlines / being familiar with housing crisis, guess I'm just not an acronym person.
- zem 3y ago
  same here, I remember the story and the concept but not the term
  - cbsmith 3y ago
    I really appreciate the effort you guys are going through to make me not feel so old. ;-)

VHRanger 3y ago

The analogy here is that the CDO is a financial product that's built from other debts. Specifically, it was a piece of partial ownership on a bunch of mortgages in 2008. The issue here is that when the junk mortgages defaulted, the CDO also went sideways [1] In any case, what the author is thinking about is more "systemic risk" (think leftpad or cascading DNS failures) rather than debt-based analogies. One big reason 2008 became such a big mess was the systemic issues, not building products on debt [2] 1. Fun fact - before 2008, they had started making CDOs out of CDOs because of of the insatiable appetite for mortgage-backed financial products. When mortgages are underwritten for people withouth a job, and packaged in a product with a AAA credit rating, it turns out it's a profitable thing to sell. 2. Also the fact that Lehman and Bear Sterns had leverage ratios in the 30x-40x range, which is insane.

deleted 3y ago
[deleted]

layer8 3y ago

I was thinking of https://en.wikipedia.org/wiki/Collaboration_Data_Objects https://en.wikipedia.org/wiki/Collaboration_Data_Objects. ;)

xeromal 3y ago

You gotta watch The Big Short. That's where I learned what a CDO was

Ekaros 3y ago
I also recommend Margin Call... Then again, I need to put some more thought in analogy where dumping all of it to unsuspecting people would work here...
- xeromal 3y ago
  I love Margin Call. Jeremy Irons is so good!
jasonjmcghee 3y ago
Great movie- but didn't remember this acronym.
- jfoutz 3y ago
  I think they make a joke out of the explanation. Iirc, Margot Robbie explains it, while taking a bath.

bunnie 3y ago

Correct, with the implication that by creating incentives to bundle junk tech debt into 'AAA' packages (packages with good reputation), the Rust ecosystem is heading for a bubble (and eventually a collapse) because the rating agency that's supposed to regulate things has been gamed.

mwcampbell 3y ago
Do you think that implication is correct? If so, how do we fix it? Of course, companies should pay for what they use, but how do we practically implement that?
- jahewson 3y ago
  Great question. One thing to remember is that the value of a piece of software that’s heading towards being un-maintained is much lower than one that has a clear maintenance path. One should be wary of single-maintainer projects. That said, the number of maintainers and the amount of code per maintainer would seem to be the important variables. In this case the code has moved from a repo with one (albeit absent) maintainer to another with one maintainer. Let’s call that neutral. However our new maintainer now has much more code to maintain so the risk has measurably gone up. It might be worth also taking into account how much code in total someone is responsible for across the cargo ecosystem.
- bunnie 3y ago
  I feel like the analogy does not quite hold because when the junk debt was vendored in, the maintainer actually has more knobs than before to fix the problems - and if it's as easy as bumping some dependencies and fixing a few method signatures, it might actually happen. Whereas in the 2018 crisis, junk debt was rolled into CDOs but there were no 'knobs' the bankers could turn to actually improve the fundamentals of the junk debt. By repackaging the debt they did not get any right to fix the bad actors that made it bad. Things were actually bad, and when it defaulted there was insufficient firewall to prevent the contagion from affecting the encapsulating derivative. Of course it is up to the maintainer but by absorbing an abandoned project, they are actually reducing the amount of unmaintained code, versus simply hiding it. Probably the more accurate analogy to 2018 would be if a private equity firm started a company you could pay to upgrade the rating of an unmaintained Rust package, but no actual change happened and all they did was swap labels on things until the problematic rating disappeared.

m463 3y ago

with 3 XOR operations, I could optimize those Code Default Swaps.