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

To: mishedlo who wrote (107711)2/2/2010 11:31:52 AM
From: Hawkmoon  Read Replies (1) | Respond to of 116555
 
5) Prohibit the use of credit default swaps except for bona-fide hedging purposes.

The problem that's going to have to be deal with regarding CDS is that they are an international OTC market.

Regulating them only in the US will not prevent their continued use outside of our borders.

But we'll definitely be sending a "shot across the bow" of any hedge funds if the US court system declares will will not honor any contractual obligations from any entity not holding an "insurable interest".

But since many US corporations are multi-national, this will be difficult to enforce.

Hawk



To: mishedlo who wrote (107711)2/2/2010 2:37:49 PM
From: rich evans  Respond to of 116555
 
Create an exchange with margin requirements and require one to be at risk on the debt before buying the insurance. And therefore the amount of CDS out for any one debt would not exceed the notational amount of the debt. Make these rules mandatory and subject to criminal action.
Rich


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