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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (104920)	11/26/2009 2:07:59 PM
From: Hawkmoon	Respond to of 116555

Was just getting ready to post about that from Naked Capitalism: nakedcapitalism.com They also cite the potential that European Banks are possibly caught on the wrong side of the trade and have been caught flat-footed. The standstill announcement…was a massive surprise. One could sense the panic in those asking questions….this could be the turning point in spreads and could be viewed similar to the Russian debt crisis in 1998 or the Bear situation in 2007…based on companies and the accents of the people asking questions, it is obvious European institutions will be hit hard…Dubai made this announcement at the beginning of a four day holiday, so there will be little news until next week…There is another wave of pain out there. This information does not seem to be making its way to other markets. It will. And it's a very good point that is made that it's possible that mark to market accounting may require much of this Dubai debt to be written off as a default. Furthermore, it may trigger CDS events: However, Dubai is seeking a standstill on its debt while it renegotiates. I’m not a credit default swaps expert, but that sound like an event of default to me, and if so, that has the potential to have all sorts of repercussions. First, creditors who are not fully hedged who are subject to mark to market reporting will show significant losses. Second, the CDS protection sellers will also be showing losses and posting collateral. Hawk