with all these ads you must be working for Alex Jones are there any archives online where you can prove that Alex Jones was right this time? I stopped reading his stuff about 4 years ago, after he was convincing everyone that Martial Law will be in place before Bush gets elected for the second term ...well, I lived during martial law in Poland, and although I was very, very small...I can't find any similarities
yep it's true that a default swap was a contractual agreement between the bondholder and swap writer.. but then some wide skulls on the street started computer pricing models to base naked swap sells on.. and you have an swap market 62 trillion in size and yes, it is wild shit.
No problem. I really didn't know much about it, as some here told me, until I actually listened to that program two weeks ago. It taught me a lot. It's very concise and entertaining. Ira Glass rocks.
I traded debt among other things for a big bank and we followed the CDS market in our bonds. Up until a couple years ago, they were like taking the insurance when the dealer has an ace. Why have your money out there if u are not going to bet. Problem was u could buy/sell distressed debt at huge leverage, but CDS's require I believe - all the capital 100% up. The speculators (big boys) banks/biggest hedgies took over and the tail started to wave the dog. It's funny to watch Barney Frank and all the Washington folks say short sellers ruined Bear and LEH. It was short sellers, the SAME guys that they 'exepted' the very first day of no short selling - the CDS market makers. Betters against banks bot the CDS's HUGE (betting against the bank/broker) and the market makers of these CDS's were forced to hedge themselves (not economical to short the debt) so they went out and shorted the pi$$ out of the stock. This market was WAY bigger than the stock market trading in these stocks. This is why in he heat of things we'd see LEH, MS, GS all down big pre-open, then open much higher than they were trading. Bond guys start trading early and the mkt makers were shorting pre-open to hedge. Maybe they'll figure this all ou when they look back and study what happened in September.
Credit Default Swap is designed as insurance for commercial papers. It has inheritance danger when your counter party go belly up, your insurance become worthless, and you also lost your premium.