Monday, Feb 18, 2008
Credit crunch faces the biggest test of all Credit Default Insurance Market
NY Times: Arcane Market Is Next to Face Big Credit Test
Credit default insurance markets ballooned out of obscurity in 2000. Mortgage debt only totals $7 trillion and pales by comparison to this CDS bubble.
Posted by happyrenterz @ 04:30 PM (1036 views) Add Comment
13 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. happyrenterz said...
2. Montesquieu said...
This finally looks like the 'dark matter' in the money supply equations ... is there any assessment yet of likely default levels? If things turn even slightly bad the destruction of balance sheets could dwarf the impacts of anything we've ever seen before ... a 10% fall would be equal to the entire amount of US treasuries ...
3. techieman said...
Great post - HR - thanks
4. Montesquieu said...
the other question is - exactly where is this $45trillion - it's clearly not in securities, or in the US stock market ... looks like it's purely in/on paper to me, if the real assets - corporate bonds - are so small by comparson.
And - unbelievably - it's unregulated.
I smell tulips ....
5. James said...
Pointless post - what's the *net* outstanding in CDS?
6. lvmreader said...
Yup, my favourite and pet subject CDS. Thanks for "re-upping" this. I posted it at 2am, but I guess it was swamped.
7. voiceofreason said...
So, when does this particular bubble really pop ?
It seems to have been popping at least since last summer...
8. sold 2 rent 1 said...
CDS was mentioned at the end of Dispatches: How The Banks Bet Your Money.
It is being billed as the next shoe to drop
9. happyrenterz said...
10. hoyo said...
@ STR1
Excellent program , shame it was on the same time as the upbeat eastenders & corrie thus not educating the sheeple . It left me with various emotions anger mainly mixed with fear at where it all ends.
Still I thought old John could told us who he really blamed !!!! LOL
11. enuii said...
I have just read up on Credit Default Swaps and have concluded that they are far too complex for their own good, agree with Warren Buffets description of them as 'financial weapons of mass destruction' and I'm quite alarmed at the incestuous relationships within the credit default swap trading community, insider trading is not only a given, but appears to be the fundamental basis upon which the entire structure depends.
The maths involved (or rather the logic behind it) is particularly mind numbing at this hour.
12. lvmreader said...
@Enuii,
The basis of a credit default swap is very simple. If they were exchange traded they would be even simpler.
The "complex" stuff comes from probabilities of default models (intensity or reduced form / structural). If you understand the concept of insurance, you understand CDS.
13. uncle tom said...
The bottom line is that an awful lot of people are making money out of this game, while not doing anything of great material benefit to mankind. Moreover, these people are not overly concerned about the prospect of a bust, just so long as they can make money today, and get that money safely tucked away before the bust happens.
These people are looking after number one - they show no interest in collective responsibility
Will a bust happen? - it seems inevitable, given the way the market is managed (and staffed)
How will that affect the man in the street? - hard to predict exactly, but if you thought we were in a credit crunch now, then you probably ain't seen nothing yet!