The Man Who Sold the Bonds

September 6, 2013 10:55 AM

There have been a few misconceptions about the Bowie securitizations over the years. I’ll try to describe, in relatively plain English, what happened.
posted by rollick (21 comments total)

This reminds me, indirectly, of a conference I attended around 2000. One discussion was about how, as the United States was quickly paying down its federal budget deficit, there could be no need for the government to issue new Treasury notes. This would be a problem, as other bonds were priced off Treasurys. What could replace them?

Whew. Dodged a bullet there.
posted by schmod at 11:00 AM on September 6, 2013 [1 favorite]

Ashford & Simpson Bonds?

Solid as a rock!
posted by Sys Rq at 11:08 AM on September 6, 2013 [5 favorites]

"Smart word is, property values are set to quadruple in value." - D. Bowie
posted by Blazecock Pileon at 11:08 AM on September 6, 2013

And now we know how The Sovereign funds The Guild of Calamitous Intent.
posted by not_on_display at 11:12 AM on September 6, 2013 [5 favorites]

Once upon a time, rock stars weren’t rated by Moody’s. They were moody.

Ha!

Neat story. And it looks like it was a very canny move by Bowie.
posted by figurant at 11:12 AM on September 6, 2013 [1 favorite]

So with the bond reverting to Bowie in 2006, have we seen a savvy re marketing of his back catalogue by his management to extract every drop of revenue out of his career? I think so. Like everyone else, I like David Bowie, but would be contented to go to my grave not hearing Space Oddity again, and then bam-o, it's absolutely everywhere. I have always assumed the Bowie resurgence was a calculated second life.

I also suspect the same thing has been happening with Queen recently.
posted by Keith Talent at 11:18 AM on September 6, 2013

in relatively plain English

Really??
posted by MoxieProxy at 11:18 AM on September 6, 2013

Wow. The Bowie "bonds" really did happen at exactly the one and only time that they could. It was incredibly savvy for Bowie to put that deal together, and I doubt any other musician could ever replicate anything approaching such a deal today.
posted by xingcat at 11:20 AM on September 6, 2013 [1 favorite]

This is a lovely writeup.
posted by feckless at 11:26 AM on September 6, 2013

This is a decent write-up but it is categorically wrong to say that the Bowie Bonds weren't bonds.
Also, it's strange to assert that this couldn't happen again. That may be true for an individual's music royalties, but the film industry (as one example) uses securitization as a form of financing fairly regularly to this day. To say it couldn't happen again would require greater specificity or strong qualifiers, because it happens several times a year by my count.

All that said, Bowie was innovative in selecting this option and that is reflected well here.
posted by staccato signals of constant information at 11:47 AM on September 6, 2013 [1 favorite]

By the Nineties, Americans had become, quietly and with little fuss, a nation of exuberant debtors. With wages deteriorating or stagnating, for middle-class Americans to keep being middle-class, to put a kid through college or buy a car, meant acquiring more debt. This was now easy.

Sigh.
posted by Slothrup at 11:48 AM on September 6, 2013 [1 favorite]

As soon as I saw the headline, I knew this was from Pushing Ahead of the Dame. If you are a serious Bowie fan, you owe it to yourself to spend some time at this blog. Author Chris O'Leary does a remarkable job of detailing the creation and recording of virtually everything Bowie has ever recorded (last I checked, he hadn't written about The Next Day). He combines recording notes, music scholarship, catty gossip and some genuinely excellent writing. I've been writing about Iggy Pop at my "write about every song in my iTunes library blog" recently and O'Leary's entries on the songs from The Idiot and Lust for Life were indisputably the best online resources on those records.

Don't miss his entries on Bowie's songs from his 80's output. Lousy music (in general) that inspires well deserved critical evisceration from O'Leary.
posted by Joey Michaels at 12:07 PM on September 6, 2013 [7 favorites]

I'd take this whole thing with a grain of salt if for no other reason than that the author's explanation of MBS tranches is completely wrong. The BBB tranche isn't lower rated because "the borrower lived near a sewer plant or something." It's riskier because the security's terms explicitly say that any losses from the pool of mortgages are suffered by the BBB holders first. This is why Ranieri said "mortgages are math"; the attributes of the underlying mortgages are irrelevant except in their most general statistical properties. Nevertheless, great stories.
posted by drdanger at 12:12 PM on September 6, 2013 [3 favorites]

Absolutely, drdanger. Well said. That was bothering me too.
posted by staccato signals of constant information at 12:32 PM on September 6, 2013

It was incredibly savvy for Bowie to put that deal together

... and to then play extra amounts of his back catalogue live? With special tours to promote it? Lots of poorly packaged (i.e. no notes or outtakes etc) greatest hits CDs?

I think he's great and I wish him all the best, but I still like my artists to have that utterly driven thing about them, where they can't be bothered with their earlier work because it's gone, finished, doesn't do anything for them any more.
posted by colie at 1:14 PM on September 6, 2013

I still like my artists to have that utterly driven thing about them, where they can't be bothered with their earlier work because it's gone, finished, doesn't do anything for them any more.

Actually I'm pretty sure Bowie did this at some point. Didn't he refuse to play older material during the Glass Spider tour? I was actually kinda surprised that he'd started playing it again as I really paid attention to his touring after the mid-90s.
posted by GuyZero at 2:36 PM on September 6, 2013

> the author's explanation of MBS tranches is completely wrong

The article's been corrected.
posted by morganw at 4:31 PM on September 6, 2013

Bowie is the G.O.A.T. and this is just one of the reasons why.
posted by ob1quixote at 7:57 PM on September 6, 2013

I like David Bowie, but would be contented to go to my grave not hearing Space Oddity again

you shut your filthy hole
posted by Halloween Jack at 9:52 PM on September 6, 2013 [1 favorite]

Major Tom, as a character, expresses so many deep and important things about the nature of life in the 20th/21st century that by all rights he should become our Gilgamesh or Odysseus. I am totally serious.
posted by You Can't Tip a Buick at 10:10 PM on September 6, 2013 [3 favorites]

and to know that this messy human ambition was reduced to a tradeable commodity.

Author finds universal truth, applies it to one category of human endeavor, thus missing the forest for the trees.
posted by wierdo at 10:19 PM on September 6, 2013 [1 favorite]