Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: RockyBalboa who wrote (189286)	3/7/2009 10:30:24 PM
From: ChanceIs	Read Replies (1) \| Respond to of 306849

>>>How much can counterparties forgive to help clean up the mess? Nothing. The taxpayer pays it!<<< This I can guarantee. As long as there is the faintest prospect that the taxpayer will hold the bag, the counterparties will continue to whine about the systemic risk. This isn't a job for tax cheat boys like Timmy. I sure that he can calculate Black-Scholes pricing in his sleep. I am trying to think of large personas who might fit the bill. This doesn't take so much brilliance as gut understanding of the situation and strong character. A few come to mind: Anna Schwartz, James Baker, Joe Lieberman and Ron Paul. I am basically looking for somebody with executive decision making capabilities and a history of placing principals above politics. Hard to come up with a long list, isn't it. I am not a big fan of Liberman, but he did ask Clinton to resign against the wishes of his then party, and did buck the Dems by endorsing McCain. I can't think of many others. Scary isn't it.

To: RockyBalboa who wrote (189286)	3/9/2009 12:15:35 AM
From: pcyhuang	Read Replies (1) \| Respond to of 306849

RockyBalboa: >"Why was it possible that MBI, ABK and XL capital were able to tear up credit insurance contracts at a discount?? Why is AIG paying the full fare for the same ???" To answer these questions, you have to first understand the differences in the CDS portfolios owned by MBI, ABK and XL (MAX) and that of AIG. MAX had been writing only covered contracts, i.e., each written insurance contract is backed by a physical possession of the underlying bonds held by the banks. When the banks and MAX agreed to tear up the contracts, the banks had to submit the underlying bonds. If the bonds had any market value, then the insurance contract is "torn up" at a discount (notional value less the market value). AIG got itself into this mess because it had been writing naked contracts -- insurance ocntracts to the counterparties without anyone holding the underlying. Cheers,