Mortgage Derivatives Explained

Long ago and far away, in my Army days, the Pacific Stars and Stripes had a clever cartoonist named Shel Silverstein. He went on to modest fame in several fields, including the authoring and illustrating of childrens' books and songwriting ("A Boy Named Sue").

In a post on the Marketbeat blog, Jon Hilsenrath suggests the slicing and dicing of mortgage loans and other debt by Wall Street's intripid financial engineers is best explained by a poem Shel once wrote.

Entitled "Smart," the poem begins thusly:

My dad gave me one dollar bill
‘Cause I’m his smartest son,
And I swapped it for two shiny quarters
‘Cause two is more than one!
And then I took the quarters
And traded them to Lou
For three dimes — I guess he don’t know
That three is more than two!

Mr. Hilsenrath may be on to something.