CDO Market Is Dead, Not Just Pining for Fjords

A Monty Python parrot sketch takeoff on the sub-prime mess by Mark Gilbert from Bloomberg (You can access the news column here

For those who have never heard about Monty Python or the Parrot Sketch (and have been living under a rock), you can find the Parrot Sketch video at here on YouTube

Hedge-Fund Guy enters an investment bank. "I wish to complain about this derivative security what I purchased not two years ago from this very boutique," he says.

"Ah yes, the Collateralized-Debt Obligation," says the Wall Street Banker. "What's wrong with him?"

"I'll tell you what's wrong with him, my lad. He's dead, that's what's wrong with him!"

Wall Street Banker: "No, no, he's ... restin'." Hedge-Fund Guy: "Look, matey, I know a dead derivative when I see one, and I'm looking at one right now."

"No, no, he's not dead, he's restin'! Remarkable investment, the CDO, isn't it? Beautiful plumage!"

"The plumage don't enter into it. He's stone dead."

"Nononono, no, no! He's restin'!"

"All right then, if he's resting, I'll wake him up!" (Shouts at the derivative): "Ello, Mister CDO! I've got a lovely fresh rating upgrade for you if you ..." (Wall Street Banker leans over and nudges the derivative contract.) "There, he moved!" "No, he didn't, that was you hitting him!" "I never!!" "Yes, you did!"

Hedge-Fund Guy (yelling and hitting the derivative repeatedly): "HELLO CDO!!!!! Testing! Testing! This is your 9 o'clock alarm call!" (Picks up the CDO and thumps it on the counter. Throws it up in the air and watches it plummet to the floor.) "Now that's what I call a dead CDO."

Wall Street Banker: "No, no ... he's stunned!" "STUNNED?" "Yeah! You stunned him, just as he was wakin' up! Collateralized-Debt Obligations stun easily."

AAA Rating?

"Now look, mate, I've definitely 'ad enough of this. That CDO is definitely deceased, and when I purchased it not 24 months ago, you assured me that its total lack of movement was due to it bein' tired and shagged out following its strenuous efforts to achieve a AAA credit rating."

"Well, he's... he's, ah... probably pining for the fjords." "PININ' for the FJORDS? What kind of talk is that? Why did he fall flat on his back the moment I got 'im home?"

"The Collateralized-Debt Obligation prefers keepin' on his back! Remarkable investment, isn't it, squire? Lovely plumage!"

"Look, I took the liberty of examining that CDO when its credit rating fell to junk, and I discovered that the only reason that it hadn't collapsed in the first place was that it had been NAILED there."

Va-Va Voom

"Well, of course it was nailed there! If I hadn't nailed that CDO down, it would have nuzzled up to the edge of your investment strategy, forced its way out between all those deadly dull stocks and bonds, and VOOM!"

"VOOM? Mate, this CDO wouldn't `voom' if you put 4 million volts through it! He's bleedin' demised!"

"No. no! He's pining!"

"He's not pining! He's passed on! This CDO is no more! He has ceased to be! He's expired and gone to meet 'is maker! He's a stiff! Bereft of life, he rests in peace! His metabolic processes are now 'istory! He's off the twig! He's kicked the bucket, he's shuffled off 'is mortal coil, run down the curtain and joined the bleedin' choir invisible! THIS IS AN EX-INVESTMENT!"

(Pause).

Wall Street Banker: "Well, I'd better replace it then. (He takes a quick peek behind the counter.) "Sorry, squire, I've had a look around the trading desk, and we're right out of CDOs. Asset-backed securities in general are in very short supply." (Taps the side of his nose, winking.) "I've got a box full of Treasuries, though."

(Pause).

Hedge-Fund Guy (sweetly): "Do they offer a spread over U.S. government debt?" Wall Street Banker (mumbling): "No, not really, not a spread as such, no."

Hedge-Fund Guy: "WELL THAT'S HARDLY A BLOODY REPLACEMENT THEN, IS IT??"