Tuesday, January 12, 2016

Ch... Ch... Ch... Changes

I turn and face the strain (of keeping up with world events):

"When I woke up Monday morning and heard that David Bowie had died, my first thought was, “Which one?” My second response was to sink into a bummed-out fog, because I’m not remotely ready for Bowie to be gone yet. Maybe you share the same sentiments." 

No, maybe I don't. 

That is not to say I wished ill on him or am out dancing in the streets upon hearing about his death. My impressions of him was that he was a bit of a freak. I didn't care much for his songs, although I do now recognize his trailblazing when it comes to the transgender confusion in our society today. I hadn't until I saw the outpouring in the ma$$ media. 

At the risk of being distasteful (body still warm, not in ground yet), can we get a look at the will?

"How ‘Bowie bonds’ changed Wall Street" by Liz Moyer New York Times   January 11, 2016

NEW YORK — David Bowie was known for his ability to reinvent himself. But he also helped inspire a pocket of Wall Street that tries to create money out of weird things like billboard rental income, cellphone tower lease payments, and literary or film libraries. 

Yeah, Wall Street "creates money out of weird things" and they were in$pired by Ziggy Stardust here.

In 1997, Bowie bundled up nearly 300 of his existing recordings and copyrights into a $55 million security that paid the buyer — Prudential Insurance Co. of America — a 7.9 percent annual rate over 10 years, backed by the income from his royalties and record sales, and the licensing of his songs for films or other uses. 

That was his bright idea!?

The so-called Bowie bonds were among the first in what would become a wave of esoteric asset-backed securities deals based on intellectual property. Bankers have also come up with securities backed by franchise revenue for the restaurant chains Sonic and Church’s Chicken, among others.

The buyers in these deals, which are negotiated privately by the banks that put the transactions together, tend to be specialized hedge funds or big institutions that can negotiate terms with the bankers. Bowie’s Wall Street collaboration inspired other celebrities to cash in while the getting was still good.

It's not anymore?

Most asset-backed securities are secured by income generated from mortgages, credit card loans, and auto loans. But mortgage-backed securities gave the sector a bad name during the financial crisis and investors backed off for a while. 

But not now. 

In other words, there are more mountains of debt that can't be paid out there waiting to for shoes to drop as Wall Street is back to bu$ine$$ as u$ual after 8 years and Dodd-Frank, blah, blah, blah, blah.

Issuance of asset-backed securities dropped 16.6 percent last year, to $184 billion, with a steep drop off in deals backed by credit card loans, according to the Securities Industry and Financial Markets Association.

Wait until the student loan bundles pop.

Deals backed by unusual assets make up about a tenth of the asset-backed security market, appealing to investors who want higher yields and are willing to take on more risk.

“There’s a nonanalytic aspect to these deals that makes them riskier,” says Sylvain Raynes, a founder of R&R Consulting who worked at Moody’s at the time the Bowie bond was being rated.

That's Moody's -- one of those that rated all the MBS crap AAA -- admitting they rubber stamp the stuff. 

What do you think a nonanalysis is?


It was a good deal for Bowie but all he left to his heirs was junk.

He can now join the ranks of such cultural icons as Warhol and Dylan, or so I am told. 

This blog is do for some changes, but what?