Vi - your CDS Trillions - here you go. As we earlier suggested, overinsuring neighbours house then burning it down >>>> very prominent voice. Now Max90 should come and read it:
Harry Markopolos: CDS Fraud Will Make Madoff Look "Small-Time"
Lawrence Delevingne|Aug. 12, 2009, 2:01 PM|38
businessinsider.com
Memo to regulators: be forewarned about frauds in the credit-default swap market. They'll make Bernie Madoff's $65 billion fraud "look like small-time."
That's what Harry Markopolos -- Madoff's whistleblower ignored by federal investigators -- is saying, anyway.
New York Post: [Markopolos] says there are evildoers out there who will make the Ponzi scum "look like small-time." Markopolos gave a speech to 400 of the faithful at the Greek Orthodox Church in Southampton and predicted major scandals will soon be revealed about the unregulated, $600 trillion, credit-default swap market. "To put it in simple terms, it is like buying fire insurance policies from five different insurance companies on your neighbor's house and then burning down the house," he said.
It's not clear if there are frauds that he knows of, specifically, that he's not disclosing publicly, or if it's just his how the market works -- in which case, he's basically just parroting what a lot of people who hate "naked" CDS have been saying. Either way, we suggest Mary Schapiro or the CFTC pay him a call and get a clarification.
businessinsider.com
A SCANDAL BIGGER THAN BERNIE
August 12, 2009 --
nypost.com
HARRY Markopolos -- the whistleblower on Bernie Madoff who proved to be much smarter than the SEC -- says there are evildoers out there who will make the Ponzi scum "look like small-time." Markopolos gave a speech to 400 of the faithful at the Greek Orthodox Church in Southampton and predicted major scandals will soon be revealed about the unregulated, $600 trillion, credit-default swap market. "To put it in simple terms, it is like buying fire insurance policies from five different insurance companies on your neighbor's house and then burning down the house," he said. After his lecture, Hampton Sheet publisher Joan Jedell reports Markopolos was feted at a dinner at Nello Summertimes hosted by John Catsimatidis and his wife, Margo, who were joined by Al D'Amato and Greek shipping magnates Nicholas Zoullas and Spiros Milonas.
nypost.com
This is my original suggestion - and at the time no one believed me: Message 25355060
In CDS world all that does not apply. It is no problem to overinsure a 4B bond issue some 10 or 20 times. It pays off to slaughter a company (or have bought directors doing the job) and collect a multiple times of the defaulted bonds from the insurers. As I said this is only possible with cash settlement instead of delivering a defaulted issue which would effectively limit the compensation amounts to the real economic damage.
Message 25354063
All happened when the CDS protocol was changed to "cash settlement", from physical delivery. As in fire insurance: I actually don´t need to own the house which is set on fire. It could be the neighbours or the ex spouses house. Or, I don´t need to turn over the wreck any more; all I need is to show a photograph of the car...
Said that, while cash settlement resolved the problem of inefficient defaulted bond prices (which were sometimes too high going in a settlement), it opened the real can of worms. Derivative bets on the default and ultimate settlement prices can reach an high multiple of the default in question, as if a thousand similar houses would burn.
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