5
POPSGeithner Says Credit-Default Swaps Weren't the Problem, After All.
But if Mr. Geithner now says the AIG bailout wasn't driven by a need to rescue CDS counterparties, then what was the point? Why pay Goldman and even foreign banks like Societe Generale billions of tax dollars to make them whole? Regulators say that having taxpayers buy out the counterparties improved AIG's liquidity position, but why was it important to keep AIG liquid if not to protect some class of creditors? Yesterday, Mr. Geithner introduced a new explanation, which is that AIG might not have been able to pay claims to its insurance policy holders: "AIG was providing a range of insurance products to households across the country. Yet, if there is one thing that all observers seemed to agree on last year, it was that AIG's money to pay policyholders was segregated and safe inside the regulated insurance subsidiaries. If the real systemic danger was the condition of these highly regulated subsidiaries"where there was no CDS trading"then the Beltway narrative implodes.
0
POPSJPM exposure to auto industry well, at least the existence of the CDS market let banks to hedge some of the risks. Without markets, JP would have been left holding the bag
3
POPS George Soros: Lion in a Gazelle Cage? (helped in part by Soros’ own Cassandra act) but also because of deals like his recent purchase of IndyMac (one of the leading subprime mortgage lenders that closed because Senator Chuck Schumer talked too much). Given his newly-purchased influence in the White House, he will have great influence in how those new laws are written, if he doesn’t actually write some of them himself. He is about as likely to suggest regulations that will inhibit his ability to make money as a lion would be to suggest that he not be given the key to the gazelle cage at the zoo. Remember that Soros made a killing by shorting the British Sterling in 1992 on the day eventually known as Black Wednesday and was in the middle of the 1997 Asian financial crisis that collapsed at least one nation’s currency and threatened to do the same to several more. He is not in business to help any one but him.
2
POPSExchange System Approved For Credit Default Swap Mess CHICAGO, March 13 /PRNewswire-FirstCall/ -- CME Group, the world's largest and most diverse derivatives exchange and its associated joint venture, CMDX, today announced that they have received a special exemption from the U.S. Securities and Exchange Commission (SEC) for clearing and trading credit default swaps (CDS) through CME Clearing and the CMDX platform. With this exemption, CME Group and CMDX have completed the regulatory reviews necessary to launch CDS clearing and trading in the U.S. The SEC exemption allows CME Group to use its existing clearing membership structure to offer CDS clearing services backed by CME's industry-leading financial safeguards package of approximately $7 billion. Clearing members that are registered FCMs or Broker-Dealers will be able to clear CDS trades on behalf of their qualified customers. CME Group will utilize its robust portfolio-based margin methodology for determining index and single name margin requirements.
1
POPS Econ 101 ~ ~ ~ ~ Economic Mess for Dummies ~ ~ ~ ~ ~ What is a CDO or CDS? Imagine taking paper debt like mortgages, subprime mortgages, car loans, credit cards loans, and pretty much anything you can imagine. Now combine and mix the paper in a blender, spiking it with worthless rhetorical hyperbole that derivatives are the new paradigm of investments. Then pour the mixture in a pyramid of champagne glasses, to represent the varying levels of return (and risk), with the higher the glass, the lower the risk return and risk. That represents the CDOs. Now as you sell the mess, insure against the risk of the CDOs decreasing in value with CDSs. Presto, $1 trillion of bad loans is transmuted into $62 trillion in faux wealth. An alchemist would be proud. http://nobullbert.blogspot.com/2009/02/economic-mess-for-dummies.html
0
POPSThe $55 Trillion Dollar Question a University of Maryland law professor and former director of trading and markets at the Commodity Futures Trading Commission. "If they couldn't keep passing the risk down the line, those guys would've been stopped in their tracks. The ultimate assurance for issuing all this stuff was, 'It's insured.'" Second, terror at the potential for a financial Ebola virus radiating out from a failing institution and infecting dozens or hundreds of other companies - all linked to one another by CDS and other instruments - was a major reason that regulators stepped in to bail out Bear Stearns and buy out AIG (AIG, Fortune 500), whose calamitous descent itself was triggered by losses on its CDS contracts (see "Hank's Last Stand"). "The big problem is that here are all these public companies - banks and corporations - and no one really knows what exposure they've got from the CDS contracts," says Frank Partnoy, former Morgan Stanley derivatives salesman.
3
Pops
Newest Clips
Latest Comments
Most Pops
Print
Save
Turn on live update