Mish's Global Economic Trend Analysis Message Board

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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: mishedlo who wrote (106313)	1/11/2010 10:12:09 AM
From: RockyBalboa	1 Recommendation Read Replies (3) of 116555

While the story may have been told with some colour the core is correct. My own trading experiences (where I was even able to piggyback on CDS settlement-related prices in some cases) and the intricate mechanics of settlement procedures which are now well published support that evidence. It became pretty clear that "overinsurance" of a relatively scarce reference instrument, a corporate bond leads to "tail-wags the dog" results where it pays off many times over to sent a company into Ch.11 and thereafter, set a deeply depressed settlement price for corporate debt on tacit or outspoken collusion. Ultimately, yet another party is able to buy some corporate debt at such low prices and thereby acquire corporate assets cheaply. If one plays it right one can win "all ways". If you are interested I look up related posts from some years ago regarding certain examples.

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