Readings

From the movie review of a must-see movie 'American Casino'

... when the perpetrator actually explains it to you your reaction falls somewhere between nausea and hilarity. It’s as if the Russian Mafia had paid a Colombian drug cartel to certify its integrity. The banker, apparently still a young man, grows more chagrined as he digs further into absurdity. The debt obligation, thus packaged and affirmed, was divided into tranches—bonds rated from an inflated AAA at the top to worthless at the bottom. The bank then took one of the lower sets of tranches, consisting, say, of BBB bonds, repackaged them as a new instrument, and magically rated perhaps eighty per cent of them AAA.
In a final twist, some of the lowest tranches from this new instrument were spun into still another product, and once again some of the lower tranches were upgraded. This final iteration of the product—based on ratings that had passed through three degrees of fakery—was known in house as a “C.D.O. squared.” By now, the underlying assets were leveraged, the Shadow says, at a thousand to one, maybe even ten thousand to one. “Who was buying those C.D.O.s squared?” an interviewer asks. “Idiots,” comes the reply from the dark.