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

To: energyplay who wrote (172110)	12/17/2008 11:43:27 PM
From: neolib	Respond to of 306849

All the Inland Empire MBS will be in default, both 4 & 5. The bank currently owns MBS 5 and has a CDS on MBS 4. If the entity owns both, and has CDS on only one, that is the only one protected. That should not be in question. What I think is grossly wrong is for an entity who does not own the underlying instrument to obtain CDS protecting it. Like I say, if people want to play that game in an effectively unregulated environment (which has been the case) then make sure those games are walled off from the rest of the financial world. If they go bust, fine, but the results cannot spill over into the real world, and there are no bailouts for anyone involved. If the congress wants to outlaw CDS going forward, they can do it. They can also extinguish existing CDS, if they wish. Yeah, it really does piss me off that $10B or so that went to AIG made GS and the other IB's 100% whole on their bets placed with AIG where they didn't hold the underlying. WTF, they bet with a casino who was not good for the bets, tough luck. At the most, Paulson should have said, you guys get your premium back, but no payout.