Banks mixed bad subprime loans into complex securities called CDOs and got them rated AAA, making garbage look fresh. Investors bought these tranches thinking they were safe, not realizing they were still holding the same toxic assets underneath.
Whatever crappy levels of the bond I don't sell, I throw into a seafood stew. See, it's not old fish, it's a whole new thing. The best part is they're eating three day old halibut that is the cdo.
Now, continuing Bourdain's analogy, he as a crafty chef tosses all the unsold fish into a stew. Suddenly it's no longer unsellable old fish, it's a new dish on the menu and the diners don't realize the consuming three day old halibut in a spicy broth. A CDO is sold as an entirely new security that somehow was not tainted by subprime. The reality is though, it's mostly composed of the same garbage loans just chopped up and mixed together. And by labeling it differently and getting rating agencies to bless portions of it as AAA again, banks found a way to sell the unsellable. So it's not old fish, it's a whole new thing is exactly how investors were duped.
