Lehmans

chucky

no - it doesn't really indicate anything, these settlements would have been bilateral. banks and firms would be buyers and sellers - for example sellers of a CDS would receive payments, they may not be able to receive as much as they thought. so you wouldn't be able to see any profit and loss there.

Sir_Humphrey

Just to be Dr Doom, but at what cost has this problem been avoided? Could settling these risks transfer the risk elsewhere?

If these risks were contained by forced selling to raise cash, that would contribute to a debt deflation spiral that may be starting to occur.

So I stand by my mea culpa earlier on.

chucky

i don't think we're looking at counterparty risk here anymore - if anything we would need to look at the Credit Risk. settlements have to be made so i would ask where has this cash come from.

but the net settlement was very small so i don't think it would have impacted anywhere else.

take this as an example:

Trade 1 (Day 1) - A buys risk from B on Enron for 1.00%.
Trade 2 (Day 50) - B sells risk to C risk on Enron for 0.70%
Trade 3 (Day 100) - B sells risk to A on Enron for 0.30%

It all gets very complicated but they all really net out in the end, unless someone buys very badly... some make and some lose huge amounts on these trades.

This was a very, very simple exmple because the majority of CDS trade were on Index's so you would have about 100 firms not just Enron on one trade. So on different days postion and risk requirements would be different and they would adjusted with the new trades.

Generali

Sir_Humphrey wrote: »

Just to be Dr Doom, but at what cost has this problem been avoided? Could settling these risks transfer the risk elsewhere?

If these risks were contained by forced selling to raise cash, that would contribute to a debt deflation spiral that may be starting to occur.

So I stand by my mea culpa earlier on.

A lot of the theory as to why CDSs are A Good Thing is that they spread the risk of loans all over the place so a lot of people make a small loss rather than a few people making a big loss. The trouble is, what happens if a lot of people make a big loss? We are about to find out IMO as companies like GM go bust.

Mary_Hartnell

PasturesNew wrote: »

Except we are not paid for our recycled cans.

I recycle almost all containers at Tesco and get a quarter of a point per container.

To get back on thread:
This programme tries to explain how boards of directors have employed fresh out of college geeks to build simplistic models.
Neither party really understood, had a real cognition, of what they were doing.

Mind you if you half understand this programme, you will sound very wise at this Xmas's cocktail party.

http://www.bbc.co.uk/worldservice/programmes/discovery.shtml

In the first of a new series of science discussions, Discovery looks at the maths and physics behind the world’s banking.
Over the last few decades the financial industry has attracted many of the brightest young scientists and mathematicians away from academia and into the offices of the investment banks and hedge funds.
Many become “Quants” – or quantitative analysts – whose job it is to build the mathematical models and software that the traders use to guide them through the markets, minimizing risk and getting a fair price.
Sue Nelson and guests Dr Paul Wilmott, Professor Gene Stanley and Professor William Perraudin discuss whether the science behind the trading was up to the job.

WTF?_2

What a bunch of silly quants.....

chucky

Generali wrote: »

A lot of the theory as to why CDSs are A Good Thing is that they spread the risk of loans all over the place so a lot of people make a small loss rather than a few people making a big loss. The trouble is, what happens if a lot of people make a big loss? We are about to find out IMO as companies like GM go bust.

to be fair Gen - GM have been struggling for quite a while, this period isn't the reason that they would go bust. it could just be the final nail in the coffin.

edwinac_2

moanymoany wrote: »

Wow, I had no idea that The United Kingdom was such a powerful force in the world! We are the puppet masters so the USA and the world had better watch out!

Well that's exactly how things are seen by Hussein Askary, commentator for the Saudi daily, Asharq Al-Awsat.

It's typical of people like you to guffaw loudly and ignorantly at the very notion that Britannia still Rules the Waves.

However, perhaps you should look beyond your brainwashing to study the true role of the City of London in the world..

Comments........

"Don't support the British Empire!"

November 3, 2008 (LPAC)--Under this title the leading Saudi international daily Asharq Al-Awsat posted a comment by Hussein Askary on November 3 under the report of British Prime Minister Gordon Brown's visit to Saudi Arabia, Qatar and the UAE to force them to back the "Britain Woods" dictatorship of the IMF.

In the 170-word-limited space for commentaries on the report, which was the main story in Asharq Al-Awsat, Askary wrote:


"Don't support the British Empire! Anyone who harbors the illusion that America is the sole controller of the world and that it is the power which dictates to the Arab states their policies, should carefully study what Brown is doing.

He is trying to save the international financial system which is controlled by the hedge funds based in the British islands, such as the Cayman Islands, through the creation of a world government under the umbrella of the IMF and run by Britain. This would supposedly be financed by the money from the Arabs which is not enough, and will never be enough to save the global financial system which was declared dead by Lyndon LaRouche a year ago.

The British Empire is not a nation. It is not England. It is a group of financial and economic interests that need nations and armies to impose their control over all nations."

The publishing of this comment, although carefully reviewed, because it took hours to be posted, does not imply that the Saudis are saying "No" to the demands by Brown to pump money into the IMF. The Saudis have not said anything, but Brown, who was in Qatar on Sunday Nov. 2, after meeting the Saudi officials on Saturday, said that he was confident the Saudis will help the IMF.

To make sure that the Arabs get the point, Brown took with him the CEOs of BAE, Rolls Royce, and British Petroleum of the Al-Yamamah affair fame, among others . The BAE-Prince Bandar Al-Yamamah operations to support and manipulate international terrorism is also capable of reaching inside the palaces and bedrooms of the kings and Sheikhs of the region. So far, one Saudi king has been murdered in his own palace. A few weeks ago, the successors of the former King Faisal bin Abdul-Aziz inaugurated a museum celebrating his life on the occasion of his assassination at the hands of a young member of the royal family in 1975 following the oil crisis of 1973. The assassin was studying in the U.S., and reportedly part of the MK-Ultra project.

One interesting irony is that Brown arrived to the region on November 2, the 91st anniversary of the Balfour Declaration, part of the Sykes-Picot plan, which promised the Jews of Europe a homeland in Palestine. Since then, Southwest Asia has been a bloody cockpit of British geopolitics and destabilization, and the Jews of Israel have not enjoyed peace in the new homeland, exactly due to British policies.

Mary_Hartnell

I'm not sure this follows on in this thread BUT:

I've just received a little booklet inviting me to a meeting to authorise Barclays Bank to get into bed with Sheikh Mansour Bin Zayed Al Nahyan.

It seems the Sheikh is getting a coupon of 14% until June 2019.
He is also getting something paying a miserable 9.75% with a right to convert to shares at a discount of 22.5%.

Who is master of the universe now?
How can I get my share of these rates?

Can anyone explain what this really means?

poppy10_2

Mary_Hartnell wrote: »

Can anyone explain what this really means?

Barclays top brass turned down the government bailout, as they would have had to comply with government guidelines on stopping outrageous bonuses and huge salaries for the directors.

Instead they went to the Gulf and begged for money, which the Sheik is now lending them at an extortionate rate - a terrible deal for the bank and its shareholders, but it means the fat cats at the top get to keep their juicy bonuses. :j

This was the reaction at the boardroom once the deal was struck:
http://www.youtube.com/watch?v=Lfqraa2hUlg