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Bad news here..the Lehman CDS Auction today valued them at $.0975 on the $1.00. For laymen here..that means:
"Sellers of credit-default protection on bankrupt Lehman Brothers Holdings Inc. would be forced to pay holders 90.25 cents on the dollar under initial results of an auction, setting up the biggest-ever payout in the $55 trillion market."
Here's another link..look at the bidders for this..gee do you think they are using the bailout money to BUY Lehman CDS paper ? More crap shoots but with taxpayer money now.
Yup..and they are flooding the market with sell orders now I'll wager.
They'll have to liquidate their other assets to cover.
That would explain the market and commodities all being down.
Yup..and they are flooding the market with sell orders now I'll wager.
They'll have to liquidate their other assets to cover.
That would explain the market and commodities all being down.
I've read a rumor that heating oil trades may be suspended. If it hits -10%, they'll stop them. Oil may drop another $5 today. Gold is the only thing staying consistent as far as I can tell.
The market is about to get another dead cat bounce. I expect a 10% drop at the end of the day.
Bad news here..the Lehman CDS Auction today valued them at $.0975 on the $1.00. For laymen here..that means:
"Sellers of credit-default protection on bankrupt Lehman Brothers Holdings Inc. would be forced to pay holders 90.25 cents on the dollar under initial results of an auction, setting up the biggest-ever payout in the $55 trillion market."
The Fannie/Freddie CDS on Monday fared much better with a higher value..like .85 on the 1.00.
Now the 68K question is..who are the sellers of this toilet paper ??
The domino has now tipped over. These are unregulated insurance contracts so it is fair to observe that they are under-reserved against losses being that this were written during the boom time when many players were operating in the market and this lead to risk being under-priced. I believe we are now going to see the next phase of this crisis. We now have entered into an area of problem that present some very difficult questions that will make your choice almost unchangeable once they are made. I do not believe the counter-parties will be able to pay sufficiently to give some assurance to investors that we are any where close to an end of this crisis. Until the fundamentals are corrected, we will see more downside moves and more bad news. Consumption based economies can not last forever, we have run our course and now its time to get back to basics.
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