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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: ChanceIs who wrote (171954)	12/17/2008 11:38:15 AM
From: Les H	Read Replies (1) \| Respond to of 306849

Is it true that there's at least two credit default swaps for each mortgage-related security?

To: ChanceIs who wrote (171954)	12/17/2008 12:27:51 PM
From: MulhollandDrive	Read Replies (1) \| Respond to of 306849

yes, i think we know the reason the fed doesn't want to cooperate with an audit of the balance sheet....they've been on both sides of the CDS bet and are showing a big goose egg, like the article said, a liquidity black hole the velocity of money is just crashing

To: ChanceIs who wrote (171954)	12/17/2008 12:50:57 PM
From: XoFruitCake	Respond to of 306849

"And I don’t think our policymakers realize what it’s going to cost our economy and the global economy in terms of liquidity, as many of the speakers were talking about before, to make these contracts good. In fact, I think when the politicians really get to understand that the bailout of AIG and the bailout of other firms on Wall Street is not to help mom and dad, and not to get lending restarted in this country, but TO BAIL OUT THE CREDIT DEFAULT SWAP MARKET. I think there’s going to be a political reaction in this country that’s going to burn the sides of people’s heads off, " heh heh, just think about what would have happened if all those CDS got trigger and not making whole. I submitted that we will have a global melt down of all the financial institution at the same time and there will be no business to speak off. Forget about buying grocery in your local store, there is no delivery and the manufacturer just shut down because there is no credit. Remember all of financial institution use CDS as a hedging tool. So if the CDS is not good any more, they have to write down the value of CDS and left with all the loss on the bonds they hold. And FDIC will have to shut those banks down immediately because their Teir 1 ratio is screwed up. I don't know any rational person would have made this choice. We have one of two choice, (a) either not allowing the CDS to trigger. That mean no big company fail (b) if a big one fail, make sure the writer of the CDS has money to pay everyone off. The come here is that financial institution in good time are money machine. So if they don't fail during the stressful time, they can earn all their loss back in 5, 10, 15 years. It is easy to take the high ground to say all the good thing we should have done. But remember the week that Etrade almost failed, everyone was worry about whether their money in brokerage account was safe. (I think we had a lot of discussion on what SIPC covered that week in this board.). When Reserve money market fund fail, everyone worried about whether their money market fund was safe. And the run on Washington Mutual and WB. Would anyone of us want to be one of those lining up in front of the banks for hours waiting to withdraw our money? Making sure thing work is very different than sitting on the sideline try to be a armchair critic.