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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum

GLD 457.82

+1.3%

Jan 23 4:00 PM EST

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To: basserdan who wrote (47203)	3/7/2009 2:51:55 AM
From: Haim R. Branisteanu	5 Recommendations Read Replies (1) of 219671

the new very profitable financial play for immense riches is going to the moon. It starts like this - 1. group of financial outfits target a company or sovereign state etc. with substantial outstanding debt - several billions or more the better 2. the group acquires CDS on this debt at very low prices 3. the group launches various negative rumors about the target until one starts to stick 4. the group buys more CDS on the same debt driving the CDS prices up as result of demand and negative rumors 5. market participants notice the rise in CDS prices take the rumors more seriously and start to sell part of the debentures - just in case 6. Price of debenture fall more than the price of the original bought CDS 7. the financial group piles on more CDS and sells short the debenture - doubling up 8. debenture fall even more - over let say 10% - financial group buys the discounted debentures and also buys more CDS's 9. the prices of the CDS continue to rise - debenture in good standing are under selling pressure and the financial group has the perfect trade in store - no losses and potential of doubling up or even triple up .... or you name it Please remmember that margin requirements for debenture are very low in most cases less than 10% of face value This is IMHO the newly secret of relentless fall in the capital markets few are grabbing billions in illegal profits due to a loophole in regulation - CDS are not defined as a insurance product to insure the financial asset it is supposed to insure - but a derivative like an put option on the debt Today this evolved in a pure speculative practice which is ruining international trade, financial institutions world wide, states and even countries this practice must and should be stopped and the issuance of speculative CDS without owning the underlying debt should not be permitted by law Passage of such an international law will shore up financial markets and bring about more stability. Failure to act promptly on this issue will bring more bank and financial institutions failure and transfer wide held funds into the hand of few speculator that will continue to terrorize the world – main suspects are originated in the US but they do not act alone and that is one reason why the US congress does not act swiftly on legislating the issuance of CDS ______________________________________________ Remark I was involved in structuring this type of "puts" with hedge funds but for a positive purpose over 15 years ago. Companies that sold "widgets" at the time to emerging markets including Brazil needed to liquefy their receivables and / or notes which where spread over several years. By issuing a "put" or in today lingo a CDS on those trade receivables the company was able to borrow at very low rates up to 70% to 75% of the face value of the receivables form a commercial bank. (EXIM bank does it all the time and most countries have a similar entity – due to the rapid growth of international trade those institution reached their limit and therefore the help of other financial institutions was needed) The financial institution issuing the "puts" usually a hedge fund with several billion in assets was insuring 50 to 100 million in trade receivables, very rarely more than that therefore it did not grow to a substantial risk and in most cases added to their returns.

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