SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : Waiting for the big Kahuna
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Real Man who wrote (82186)10/18/2008 4:38:07 PM
From: TFF1 Recommendation  Read Replies (2) of 94695
 
Everyone keeps quoting these BIS figures of 600 trillion in o/s derivatives. But the bulk of that is exchange traded and therefore matched off in central clearing.

DTCC says CDS o/s is now 34 trillion down from 44 trillion in april 2008. Of this the DTCC says "Less than 1% of credit default swap contracts currently registered in the Warehouse relate to particular residential mortgage-backed securities"

So the real risk out there I guess is about 33 trillion on OTC traded CDS. One would assume the bulk of it is CDS bets on corporate risks suck as FNM, FRE, banks, financials, GM,foreign countries etc.

Interestingly these seem to be tool of choice(bang for the buck no doubt) by the shorts to bring down their targeted equities. By blowing out the spreads on the CDS the market infers the company is gonna BK so they trash the stock.

If they are successful then we have the LEH type CDS settlements. DTCC says that " the Lehman Brothers bankruptcy indicate that the net funds transfers from net sellers of protection to net buyers of protection are expected to be in the $6 billion range"

I suspect it would take quite a few BK's to really press the financial system at that rate. I guess only time will tell.

Message 25063671
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News