The Epic American Credit and Bond Bubble Laboratory Message Board

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

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To: Giordano Bruno who wrote (85688)	8/30/2007 7:04:31 AM
From: stan_hughes	Read Replies (1) of 110194

One unfortunate (for analysts) aspect of the current credit meltdown however is that not even Moody's knows for sure the degree to which individual investment firms are on the hook for swaps -- swaps for which firms accepted premiums while quite possibly not recording the contingent liability on their balance sheets -- swaps that will ultimately get exercised and arrive on their doorsteps asking that firm to make good on someone else's losses that the firm knowingly underwrote in exchange for the premium payment. Of course we would all like to think that any of the big public banks/brokers/funds/whatevers have told everyone all there is to know about their real and potential liabilities, including all their swap obligations -- but since we are seeing some rather large business failures and will undoubtedly see more, everybody in the swap market can't be completely off the hook all at the same time, i.e. there has to be SOMEBODY out there holding some very large toxic bags -- so who is it?

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