A Ponzi scheme means essentially that you give the first entrants high returns with the money invested by later entrants ; this is not the scheme of CDOs at all : CDOs are insurance contracts. Un roi sans divertissement est un homme plein de misères
The lack of CDO trading was especially emphasised at the moment of BNP Paribas crisis. CDO valuation was anything but effective. Banks and hedge funds would have normally sold junk CDOs away, but they were scared reveal the real value of CDOs; and the real value of CDOs was opaque because they were rarely traded. That was the reasoning so shortly ago.
I'm guessing the first few iterations of the high-risk tranches would have posted impressive returns, and this would have been enough to persuade hedge funds to funnel money at them, starting a mini-Ponzi stampede, which would in turn have made CDOs as a whole look more attractive - especially with unrealistic risk ratings.
All it's going to take is proof that someone somewhere moved money from Tranche A to pay off a high return on Tranche B in the hope that money would come in to cover Tranche A at some point, sooner or later, and you have a classic Ponzi.
I'll be surprised if no one tried this.
And the 'real value' of anything is given by the market, anyway, in our utilitarist world. Un roi sans divertissement est un homme plein de misères
