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

To: ggersh who wrote (107690)	2/1/2010 9:22:37 PM
From: Hawkmoon	2 Recommendations Read Replies (2) \| Respond to of 116555

This could be why Bear Stearns went down. Where's the justice! Could be? It's pretty well common knowledge that CDS arbitrage, combined with the FASB M2M changes, were responsible for this rape and pillage. Yes.. the IBs and RAs were packaging sht and rating it as gold, but the Hedgies were buying the CDS, (naked?) shorting the crap out of the underlying asset, and then shorting the financials to boot, in order to make them scramble for more capital. It's the primary reason that CDS MUST* come under regulation like any other form of insurance. The difficulty lies with how to create international standards that will be upheld by all the players. The first place to start is that only people with "insurable interest" on the asset should be able to purchase and sell CDS. But there must also be transparency in those markets. Until CDS are under control and regulated, anyone issuing debt is just asking to have that debt targeted for a CDS "pile-on" and shorting of the actual debt. Hawk