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[Mark is talking to CDO manager Wing Chau in a Vegas restaurant] Mark Baum: Hold on, hold on, say that again. CDO A has parts of CDO B and CDO B has parts CDO A, but then both get put inside CDO C? Wing Chau: Yep, and that one's called a CDO Squared - a CDO of a CDO. And then there are CDOs made up of the opposite side of the bet you made with swaps. We call them synthetic CDOs. Mark Baum: What did you just say? "Synthetic CDOs?" That is fucking crazy. Wing Chau: It's not, it's awesome! Mark Baum: Alright, let's say you have...50 million in subprime loans. How much money could be out there betting on it through these synthetic CDOs and swaps? Right now, tonight?: Wing Chau: 50 million? A billion dollars. Mark Baum: [astonished] What? Jared Vennett: [voiceover] If the mortgage bonds that Michael Burry discovered were the match... Mark Baum: How much bigger is the market for insuring mortgage bonds than actual mortgages? Wing Chau: About twenty times. Jared Vennett: [voiceover] If the mortgage bonds were the match, and the CDOs were the kerosene-soaked rags, then the synthetic CDO was the atomic bomb with a drunk president holding his finger over the button. It was at that moment, in that dumb restaurant with that stupid look on his face, that Mark Baum realized the whole world economy might collapse.

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