Credit Default Swaps

[Anonymous]

Credit Default Swaps are the offsetting position.

They are “insurance” against a default in a loan – be it a MBS, CDO or debt.

[Bubblesitter]

Any Derivative Traders out there that can comment?

AIG is on the cusp of full acceleration of their swaps. On CNBC, Carlos Mendez of ICP capital is saying that Asia big institutions are already trading as if AIG is already bankrupt, the calling the swaps. $75 Billion that the Fed, and big institutions are trying to raise is no where near enough to cover this.

If you don’t want ot listen to the whole CNBC clip, start at around 8 minutes

http://www.cnbc.com/id/15840232?video=857301616&play=1

[Bubblesitter]

Any Derivative Traders out there that can comment?

AIG is on the cusp of full acceleration of their swaps. On CNBC, Carlos Mendez of ICP capital is saying that Asia big institutions are already trading as if AIG is already bankrupt, the calling the swaps. $75 Billion that the Fed, and big institutions are trying to raise is no where near enough to cover this.

If you don’t want ot listen to the whole CNBC clip, start at around 8 minutes

http://www.cnbc.com/id/15840232?video=857301616&play=1

[Bubblesitter]

Any Derivative Traders out there that can comment?

AIG is on the cusp of full acceleration of their swaps. On CNBC, Carlos Mendez of ICP capital is saying that Asia big institutions are already trading as if AIG is already bankrupt, the calling the swaps. $75 Billion that the Fed, and big institutions are trying to raise is no where near enough to cover this.

If you don’t want ot listen to the whole CNBC clip, start at around 8 minutes

http://www.cnbc.com/id/15840232?video=857301616&play=1

[Bubblesitter]

Any Derivative Traders out there that can comment?

AIG is on the cusp of full acceleration of their swaps. On CNBC, Carlos Mendez of ICP capital is saying that Asia big institutions are already trading as if AIG is already bankrupt, the calling the swaps. $75 Billion that the Fed, and big institutions are trying to raise is no where near enough to cover this.

If you don’t want ot listen to the whole CNBC clip, start at around 8 minutes

http://www.cnbc.com/id/15840232?video=857301616&play=1

[Bubblesitter]

Any Derivative Traders out there that can comment?

AIG is on the cusp of full acceleration of their swaps. On CNBC, Carlos Mendez of ICP capital is saying that Asia big institutions are already trading as if AIG is already bankrupt, the calling the swaps. $75 Billion that the Fed, and big institutions are trying to raise is no where near enough to cover this.

If you don’t want ot listen to the whole CNBC clip, start at around 8 minutes

http://www.cnbc.com/id/15840232?video=857301616&play=1

[barnaby33]

We covered this quite a while ago, its not the CDS defaults that are really the problem. Its what they are insuring against that is the problem. If there are 50 trillion in notional CDS contracts, but they are only insuring against 1 trillion in acutal bonds or other assets; the maximum loss is the 1 trillion, plus the premiums paid for those contracts.

I find it funny reviewing my own writing that I would ever think that a trillion dollars isn’t a lot of money, but its a shitload less than 50 trillion.

The best question I can think of to ask is, what percentage of those CDS will have a credit event, being exercised, and on how much in terms of underlying assets?

Josh

[barnaby33]

We covered this quite a while ago, its not the CDS defaults that are really the problem. Its what they are insuring against that is the problem. If there are 50 trillion in notional CDS contracts, but they are only insuring against 1 trillion in acutal bonds or other assets; the maximum loss is the 1 trillion, plus the premiums paid for those contracts.

I find it funny reviewing my own writing that I would ever think that a trillion dollars isn’t a lot of money, but its a shitload less than 50 trillion.

The best question I can think of to ask is, what percentage of those CDS will have a credit event, being exercised, and on how much in terms of underlying assets?

Josh

[barnaby33]

We covered this quite a while ago, its not the CDS defaults that are really the problem. Its what they are insuring against that is the problem. If there are 50 trillion in notional CDS contracts, but they are only insuring against 1 trillion in acutal bonds or other assets; the maximum loss is the 1 trillion, plus the premiums paid for those contracts.

I find it funny reviewing my own writing that I would ever think that a trillion dollars isn’t a lot of money, but its a shitload less than 50 trillion.

The best question I can think of to ask is, what percentage of those CDS will have a credit event, being exercised, and on how much in terms of underlying assets?

Josh

[barnaby33]

We covered this quite a while ago, its not the CDS defaults that are really the problem. Its what they are insuring against that is the problem. If there are 50 trillion in notional CDS contracts, but they are only insuring against 1 trillion in acutal bonds or other assets; the maximum loss is the 1 trillion, plus the premiums paid for those contracts.

I find it funny reviewing my own writing that I would ever think that a trillion dollars isn’t a lot of money, but its a shitload less than 50 trillion.

The best question I can think of to ask is, what percentage of those CDS will have a credit event, being exercised, and on how much in terms of underlying assets?

Josh

[barnaby33]

We covered this quite a while ago, its not the CDS defaults that are really the problem. Its what they are insuring against that is the problem. If there are 50 trillion in notional CDS contracts, but they are only insuring against 1 trillion in acutal bonds or other assets; the maximum loss is the 1 trillion, plus the premiums paid for those contracts.

I find it funny reviewing my own writing that I would ever think that a trillion dollars isn’t a lot of money, but its a shitload less than 50 trillion.

The best question I can think of to ask is, what percentage of those CDS will have a credit event, being exercised, and on how much in terms of underlying assets?

Josh

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