I couldn't find a photo I liked to illustrate this crap, so I chose the frog instead. You know the fable about the frog swimming about in hot water, never realizing the danger until (as it were) his goose is cooked! (Gotta love mixed metaphors.)
This little guy has decided to get while the getting's good. Not so the venerable firm of Morgan Stanley.
I thought of the frog parable when I read last night on Bloomberg that "Morgan Stanley plans to repackage a downgraded collateralized debt obligation backed by leveraged loans into new securities with AAA ratings in the first transaction of its kind..."
The article goes on to say: "Two years after the credit markets began to seize up, costing the world's biggest financial institutions $1.47 trillion in writedowns and losses, banks are again taking so- called structured finance securities and turning them into new debt investments with top credit ratings. While the Morgan Stanley deal is the first to involve CDOs of loans, banks have been doing the same with commercial mortgage-backed securities in recent weeks."
But hey! Banks and many other investors can't buy anything but AAA. If it's not there, let's make something they can spend their TARP money on. We'll make it out of these crappy collateralized debt obligation backed by leveraged loans! Now there's an idea for the ages.
Isn't this just what got us in the mess we're in?!