CDOs Are Back!

The Wall Street Journal reports:

The synthetic CDO, a villain of the global financial crisis, is back….In the U.S., the CDO market sunk steadily in the years after the financial crisis but has been fairly flat since 2014. In Europe, the total size of market is now rising again—up 5.6% annually in the first quarter of the year and 14.4% in the last quarter of 2016, according to the Securities Industry and Financial Markets Association.

I’d normally be all over this kind of thing. This is how it starts. Pretty soon, the Wall Street boys will be breaking out the bottles of Cristal again. And it is worth keeping an eye on. But I decided to redraw the chart from the Journal, and I have to admit it’s a little hard to get too bent out of shape:

If you squint, you can see a tiny blip upward at the far right end of the chart. Granted, the scale of the chart makes it look really small. Still, after soaring 600x during the housing bubble, it’s soared…1.3x since last year.

So, yes, let’s keep an eye on this. But even I find it hard to get too worried yet.

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This feels like the most important fundraising drive since I've been CEO of Mother Jones, with staggeringly high stakes and so much uncertainty. In "News Is Just Like Waste Management," I try to unpack the reality we all face and how we can rise to the challenge. If you're able to, this is a critical moment to support Mother Jones’ nonprofit journalism: We need to raise $400,000 to help cover the vital reporting projects we have planned, and right now is no time to pull back.

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