Why a CDO could be worth nothing even though they are "collateralized".
Review of balance sheets. Difference between illiquidity and insolvency.
What it means when the market value of a stock is different from its book value.
Different ways of accounting for an asset. Mark-to-model vs. mark-to-market.
How the bank can liquidate assets to pay off debt that comes due.
The bank gets bailed out by an equity infusion from a sovereign wealth fund.
What happens when there is no equity infusion and the bank goes in to bankruptcy.
How the banks are connected. What happens when one bank fails.
Why a CDO could be worth nothing even though they are "collateralized".
A real life example of a transaction involving CDOs.
A solution that is MUCH fairer that has a MUCH better chance of working!