“Commercial-mortgage-backed securities” are helping drive the boom in data center build-outs. It has eerie resonance with the 2008 financial crisis.
If you weren’t alive, or weren’t news-cognizant, back in 2007 when the slow motion debt crisis all around us started to give way to The Great Recession, what was eerie was that it felt like you were always hearing about refinancing debt. You couldn’t turn on a TV, or click a page on MySpace, without someone offering to refinance your debt. This was because there was a huge—and for most people, hidden—market for things called mortgage-backed securities. This piece at the Onion captured the moment well.
You could get a cheap mortgage weirdly easily because of mortgage backed securities. This involved repackaging people’s mortgages—as in mortgages on their homes—as lucrative, tradable assets, and these assets were being purchased on behalf of entities like investment banks and retirement funds. Lehman Brothers, for instance, was a staid, boring financial institution that was heavily invested in mortgage-backed securities.
Mortgage-backed securities were everywhere in the economy, and the entities that owned them were the pillars of economic stability.
