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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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From: Gemlaoshi	8/17/2007 10:12:24 AM
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As ugly as the markets are, the behind the scenes situation is even uglier. As I have posted here before, my daughter is a financial risk consultant with the consulting arm of one of the top accounting firms. Yesterday she received a call to get to GS as quickly as possible...it seem the derivatives settlement process is in danger of coming unglued. Since most of these are poorly documented private contracts with counterparties, there are $billions at stake where they don't know the counterparty or if the CP is even still in business. This has made it impossible to ascertain their existing positions because so many of the "sells" in the last couple of months have not been settled, but are in limbo. The NY Fed has been warning of this situation for the past several months...it seems like it is here in real life. My daughter has been told to expect to be at GS through the end of the year...the mess is HUGE.

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