Friday, September 18, 2009

From Candy Floss to Garages

Having said yesterday how much we loved Gillian Tett's visual imagery of "candy floss" money
(of which this new Barclays ruse is, it has to be said, another example), we now have another fine image from the same Barclays/Cayman story that we've just blogged: an analogy to help illustrate what a Structured Investment Vehicle (SIV) is.

Her analogy is a garage or cellar, where you park irritating clutter.

"For just as a garage or cellar is usually attached to a house – but not truly inside a house – entities such as SIVs and conduits have traditionally had a semi-detached status with banks. That served the banks dangerously well in the years of the credit boom, since they used SIVs as a place to store irritating stuff which they did not want cluttering up their balance sheet – such as a household stuffing rubbish into a cellar, so that it does not mess up the smart front room."

It is an image that works well.


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