Yesterday’s post on the financial sector prompted a comment about some of the confusion coming from financial sector jargon, more specifically, CDOs. Indeed, Jean’s comment was not the only question I received about these products that can sap a financial sector company of earnings when they head south. So I thought it would be a good idea to address them.
CDO: Collateralized Debt Obligation
A CDO is basically an investment that is backed by debt. This debt can include one or more of the following sources: bonds, loans and other assets that have collateral. Mortgage loans (including subprime loans) have been popular …read more

The big news right now is that Citigroup has agreed to sell a stake to the Abu Dhabi Investment Authority. This is having the current effect that Citigroup’s stock, which was in the toilet yesterday, is getting quite a boost. And it’s bringing back the rest of the stock market as the “interpretation” of the move is seen as positive for the financial sector. Reuters reports on the implications of the Citigroup deal:
Investors interpreted Citi’s move as a sign that financial institutions were repairing the damage from a meltdown in the U.S. subprime mortgage market and the resulting credit …read more