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

To: MulhollandDrive who wrote (8782)	1/23/2008 11:45:18 AM
From: Augustus Gloop	Respond to of 33421

I agree

To: MulhollandDrive who wrote (8782)	1/23/2008 2:56:16 PM
From: John Pitera	Respond to of 33421

This is Important--Let me connect the tea leaves for those who may not have picked up on two data points I have run by folks today... First John Paulson's Hedge Funds have already cleaned up to a tune in excess of 15 Billion dollars partially by reaping big rewards in Credit Default Swaps (the really murky Monster out there). Second, George Soros invites John Paulson to lunch to talk about his stategies and 350% to 550% returns using Credit Default Swaps and other newer financial structured products. They get around to discussing who is on the other side of the trade in not just the CDS's that Paulson had but the veritable ocean of other Credit Default Swaps and concomitant undefined CounterParty Risk out there on an array of financial institutions. Third, George Soros is interviewed by Becky Quick in Davos this morning and is highly concerned regarding the CounterParty Risk in the 45 Trillion dollar Credit Default Swaps market. As I pointed out here in posts the past 18 months NY FED head Corrigan oversaw a special process where there 16 largest principals in the credit default swaps arena were convened and worked to reduce the backlog of unprocessed trades in the CDS area. The backlog was over 30 days of actual processing of completed trades due to a lack of uniformity in the contracts. what was sensationally scary about this is that those trades and positions could be traded else where 3, 5 or 10 times prior to the paper settlement and review of CounterParty trading exposures and limits. Even though they made excellent progress to reduce this huge back log of trades it illustrates how this market just simply exists on the premise that all the parties will be able to make good on the contracts. More exactly the creaters and traders of these are planning on having lots of dough socked away, and they can walk away in the event of a meltdown. ... Who knows what evil lurchs in the Hearts of Men....... hhhmmmm... John