Susan's Reviews > The Big Short: Inside the Doomsday Machine

No, Susan, you would never be mistaken for a mortgage derivative analyst at a rating agency. At worst, you may have had one of them in a class you taught. But then I doubt you covered synthetic CDOs comprised of subprime, bottom-tier CDS tranches in those classes, so I think it’s safe to say you had no real role in the debacle.

Glad you liked this one. I was pretty sure you would.

I'm just delighted that I finally understand the difference between a synthetic CDO and a plain vanilla CDO (hehe, of course none of this stuff was plain vanilla, but I couldn't resist).

That thing again: this morning's news that Morgan Stanley is being investigated because some of its traders placed bets against CDOs even as it sold them to its clients.

The only surprising thing is that the feds waited so long to embark on a witch-hunt...

Of course, some witches are good, some are bad, and some seem bad and turn out to be good. (Are those the green ones?). It won’t always be easy to tell which is which, especially with grandstanders, lawyers, PR types, journalists, I-bankers, sharks, pigs, and snakes (if I haven’t been redundant) all predisposed to different versions of the truth.

While I’m reminding you of things you already know, the vanilla bean is a rather exotic seed capsule from a hand-pollinated orchid found in a small region of Madagascar. It’s the second most expensive spice in the world behind saffron. Cultivating the pods is a labor-intensive process. Also, you may not have known, since you haven’t yet read all of Wikipedia, that the name vanilla comes from the Spanish vainilla meaning “little pod”. Vainilla is the diminutive of vaina from the Latin vagina (sheath) – meant to describe the way the pod is opened to expose its seeds. I, for one, will never use “plain” and “vanilla” in the same sentence again.

Vanilla's noblest use is in the production of chocolate-flavored treats: chocolate chip cookies, brownies, chocolate cake, and hot fudge sauce.

No need for a lecture on the reasons why chocolate is the most beloved flavor, is there?

I forgot to throw down the gauntlet:

I triple-dog-dare you to order a vanilla ice cream cone next time we're at Oberweis.

And I should have understood that even a non-synthetic CDO is best described as Rocky Road.

Before you go calling me on what you view as a bluff, I should explain that I do recognize vanilla’s role as a complement to an even richer assortment of flavors. Your examples involving chocolate are good cases in point. Though I go for the whiter (vanilla-dominant) varieties more than you do, we probably correlate more closely than you think—-maybe even as much as default probabilities in geographically dispersed housing markets.

Back to the topic of vanilla, I liked your use of the word “noble”. I liked your line about Rocky Road, too! Did you know that Baskin Robbins has also featured flavors called Monkey Business and Hokey Pokey? That might be at least as relevant as the Chubby Hubby you’ve now got me thinking about.

Leave it to you to introduce the subject of the true correlation between default probabilities into the subject of flavor preferences!

You would love Chubby Hubby, as it's toffee-coated pretzels mixed into chocolate malt ice cream. But I haven't seen it at the store recently, come to think of it! Sad to think that Chubby Hubby may be extinct... :(