credit default swap disaster - the dog that did not bark?
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To: A-List <[EMAIL PROTECTED]>
From: Michael Hudson <
Well, SOMEBODY is going to lose a bundle. Who will it be?
Hedge fund losses alone won't bring the system down, because
anyone
joining has to sign a paper saying that they can afford to lose the
money
with no sweat.
the problem is if anyone has been dumb enough to insure the losses;
or
whether the bank itself will have made bad bets.
Michael
On 10/17/08 3:42 PM, "Charles Brown" <[EMAIL PROTECTED]>
wrote:
>
>
>
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> --
>
> To: Progressive Economics
> From: Doyle Saylor
>
> --------------------------------------------------------------
>
> On Oct 16, 2008, at 3:00 PM, Chris Burford wrote:
>
>
> I would be interested to know whether other list members think that
> the
> collapse of these 50 trillion dollar structures will cause an
> unimaginable
> further lurch into profound depression or whether they are just
> worthless
> air, and could be blown away.
>
>
> Doyle;
> In a discussion of J.P. Morgan's derivatives this is a quote from
Conde
> Nash Portfolio -
>
>
> J.P. Morgan continues to dominate the world of derivatives. It has
> derivatives contracts tied to $90 trillion of underlying securities.
Of
> that, $10.2 trillion are credit-derivatives contracts. Those
> mind-boggling totals are somewhat misleading. They reflect what is
> called the ³notional² amount in the world of derivatives, based on
> the underlying amount of the contract, not its current value. When
> offsetting contracts are taken into account, that figure is whittled
> down to a much smaller-though still enormous-$109 billion of
> derivatives, of which $26 billion are credit derivatives. That¹s the
> amount the bank could lose if all its trading partners went out of
> business, an extremely remote event. But the exposure is climbing,
up
> 17.4 percent from the end of 2007. That¹s equal to 20 percent of the
> bank¹s net worth.
>
http://www.portfolio.com/views/columns/wall-street/2008/10/15/Credit-Derivativ
> es-Role-in-Crash
>
> Doyle;
> Observe the notional value being stated above.
> thanks,
> Doyle Saylor
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