How to Get Rich Off a CDO — 'Avenue Q' Style
The Goldman Sachs fraud case involves such complex investing structures that it’s easy to get turned around — before anyone else even interjects to argue with you.
Enter stage left: Robert Lopez and Stephen Oremus, two of the guys behind that raunchy puppet Broadway hit “Avenue Q,”who break down how to get rich off a CDO in five easy — and hummable — steps.
[Cue the big, pounding drums and orchestral buildup]
Step 1: You write a check for $10 million dollars; hand the check to a Wall Street bank and ask them to make us a CDO.
Step 2: They create the CDO using risky stuff! Very risky stuff. Extremely risky stuff!
Step 3: Other investors commit hundreds of millions of dollars to the CDO.
Step 4: We bet AGAINST the CDO using a credit-default swap!
Step 5: The housing market crashes; the CDO’s value drops to zero. Our bet pays off. We make hundreds of millions of dollars and before you can say “Step Six” — WE'RE RICH!
[Cue the chorus]
We’re gonna bet against the American Dream
We’re gonna be on the winning team
Purchase risky debt on a massive scale
Then place a bet that the debt will fail!
Hundreds of millions from Magnetar
The economy collapsing like a dying star
No one will know till it’s on NPR
And who cares?
It’s time to hit the town
This sucker could go down
The housing market’s losing steam
And all we gotta do
to make our dreams come true
is bet against the American Dream!
Everybody, all together now:
We’re gonna bet against the American Dream …
We're gonna be on the winning team ...
The song was commissioned for an investigative piece featured on NPR’s “This American Life.”
Watch a video of the recording session:
And download the sheet musicso the whole family can sing along at your next gathering!
And All That Accounting! Now that you’re getting so confident in your knowledge of Wall Street investing structures that you’re singing about them in the shower, get your jazz hands ready for “Enron: The Musical!,”which opens next week on Broadway at the Broadhurst Theater.
C’mon Jeff, why don’t we paint the books … and all that accounting!
Questions? Comments? Email me at email@example.com or drop a line in the comment box below.
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