Wednesday, May 28, 2008

Typos Matter

In stories such as "Moody's facing more heat over debt ratings" and "Moody's Computer Glitch Prompts Stock Tumble," journalists are trying to explain how a particular glitch in the lines of code, which many reporters are comparing to a "typo," could have caused a number of risky investments tied to the U.S. mortgage crisis to be improperly labeled triple-A. The problem has to do with a complex debt instrument known as a CPDO or "Constant Proportion Debt Obligation," which is explained here at my pick for risk communication blog-of-the-month, riskopedia.

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