John Pitera's Market Laboratory Message Board

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Strategies & Market Trends : John Pitera's Market Laboratory

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To: John Pitera who wrote (10540)	11/12/2008 9:00:19 PM
From: Hawkmoon	1 Recommendation Read Replies (1) of 33421

John, I need to understand something here. The core of this problem we all know are the quality of loans, even if they are still performing. But what's truly aggravating this problem are the CDS insurance contracts, right? So there are indices which are being shorted, and exacerbating the deterioration of the underlying bonds. So why hasn't the Fed coordinated an intervention in the CDS market indiceds to stave off further manipulaton by the hedge funds? Would seem to make sense to me that stabilizing those CDS indices would frighten anyone who was short and hoping to drive bond prices down. They are derivatives, after all, and certainly the Treasury would get more bang for the buck working from where the damage is primarily being inflicted.. the CDS markets. Hawk

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