Why a bomb like the one that blew up markets in 2008 may be ticking right now
Ten years ago, collateralized debt obligations (CDOs) were at the core of what took down the economy. Now, we are possibly looking at the same type of debt causing a similar problem.
Wall Street tends to have a short memory. It forgets what went wrong before and repeats the same mistake.
Collateralized loan obligations (CLOs) are the rage these days. Right now there are $700 billion outstanding with another $100 billion issued each year. This is the same amount of that was put out in 2008 .
Many believe that CLOs are less risky than CDOs. The debt is different in that CLOs are filled with corporate debt as opposed to mortgages. The problem is corporate debt is more centralized so that when it goes bad, it has a bigger impact.
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This is really bad news! People should prepare for the worst!
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