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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: robert b furman who wrote (8772)	1/23/2008 10:08:01 AM
From: John Pitera	Read Replies (1) \| Respond to of 33421

Hi Bob, That's just it. There is no way of assessing how many Banks, Brokerage firms, insurance companies, Hedge Funds etc have exposures that mismatched. Even if as a financial institution, you believe you are properly hedged, you can still find out that your counterparties have defaulted on the credit default swaps. The key point is that in an environment of severe credit contraction, and now I speak of the trillions of dollars of assets that were credited by the creation of more synthetic financial products... In said unwinding and shrinking of that asset base we will find players globally that are not going solvent as this process continues. I need to reprint the article on the WSJ did last week that highly the 15 billion dollars or so that Hedge Fund leader John Paulson made partially through watching his long credit default swap positions increase tremendously. There are people on the losing end of CDS instruments who can not mark them to market and remain solvent. That's my impression. John