The book includes a comprehensive overview of the players in the credit market and the strategies implemented by these players, with a focus on the establishment of new vehicles (like Special Investment Vehicles (SIVs)) and innovative instruments, primarily out of the structured credit and credit derivatives universe. The book also includes an overview of historical credit crises, as this analysis is necessary to understand the basic mechanism behind crises, which is a prerequisite to discussing potential solutions. This brings us to a key wisdom with respect to financial market distortions: the question of how to avoid credit crises in the future.
1. Prologue: Chronology of a Crisis.
1.1. The subprime turmoil included all ingredients of a severe financial markets crisis.
1.2. An exemplary credit crisis.
1.3. The chronology of a crisis – The US subprime crisis.
2. Credit Instruments.
2.3. Credit Default Swaps.
2.4. CDS Indices.
3. Credit Players.
3.2. Fannie Mae and Freddy Mac.
3.3. Money Market Funds.
3.4. Central Banks.
3.5. Hedge Funds.
3.6. Bond Insurer.
3.7. Private Equity Sponsors.
4. Credit Strategies.
4.2. Leveraged Super Senior Tranches.
4.3. Constant Proportion Debt Obligations.
4.4. Structured Investment Vehicles.
4.5. Collateralized Debt Obligations.
4.6. Structured–Squared Madness.
5. The Anatomy of a Credit Crisis.
5.2. Crisis Classification.
5.3. A brief history of credit crises.
5.4. What can we learn from existing crises models?
5.5. The credit cycle.
6. Epilogue: How Can we Avoid Credit Crises in the Future?