Global Credit Ocean Dries Up

Business Telegraph ^ | 2/24/2006 | Staff Writers

[presidio9]

this was a debenture not a mtg backed bond. It couldn't be priced. The market is OTC so it is very possible that it could (and probably did) lose half of its value if there were no buyers in the secondary.

Why a bond trader would ever feel the need to point out that a bond traded "OTC" is beyond me. And, no, it is not possible for a bond like that to simply lose half its value in the secondary. If he had offered it back to the street, any trading desk would have told him to file a greivance with the firm that originally sold it to him. That firm would have DEFINITELY eaten at least some of the loss, rather than face the press over $2mm. So, again, you are talking out of your ass.

[groanup]

You're a mtg trader and obviously don't know what I'm talking about. I might as well be posting to a post. Your experience is too limited.

[presidio9]

You're a mtg trader and obviously don't know what I'm talking about. I might as well be posting to a post. Your experience is too limited.

LOL, I know enough to know that I used the debentures myself to hedge. I also own them in my own portfolio. I'm still wondering why a bond trader found it noteworthy that a bond traded OTC.

[groanup]

Because you have consistently misunderstood or not had enough knowlege to understand what I'm talking about. I thought I would be helpful.

It isn't easy being helpful sometimes when the person you are trying to help can only reply that I am talking out of my ass. One would prefer to offer help on diction and dialect.

[presidio9]

Because you have consistently misunderstood or not had enough knowlege to understand what I'm talking about. I thought I would be helpful.

LOL, keep telling yourself that if it helps you sell more refinancings and life insurance policies.

[Windsong]

One by one, the eurozone, the Swedes, the Swiss and now even the Japanese, are turning off the tap of ultra-cheap credit that has flushed the global system for the past year, keeping the ageing asset boom alive.

Fruitcakes.

[groanup]

LOL. He says sitting in his bucket shop hanging paper for peanuts.

[JeffersonRepublic.com]

"Still get an offer a day of enough credit to put one into lifetime slavery."

My credit card which I haven't used in at least 4 years just upped my credit limit from $5,500 to over $10,000. They didn't ask me, they just increased it. I'm thinking about closing it, or asking them to reduce it.

Why would I ever need $10,000 worth of credit card bills? Maybe I'll just max it out, and declare bankruptcy. /sarcasm

[presidio9]

Um, bucket shops can't trade CMOs. They have nowhere to distribute them. But even bucket shop traders don't need to be told that a bond trades OTC. You are slipping badly.

[RightWhale]

They will offer credit up to the instant the killer asteroid splits the earth in two, and they will up the limits all the more the closer it gets.

[groanup]

Um, bucket shops can't trade CMOs

Oh I beg to differ. There are hundreds of lower tier accounts that buy CMO's. But you knew that right? Right.

[presidio9]

Oh I beg to differ. There are hundreds of lower tier accounts that buy CMO's. But you knew that right? Right.

Yeah, as I said before, I actually own some pieces myself. As small as $20k. But the problem is that when you get down below $10mm face, you are talking odd-lots. At that point it doesn't become worth the added risk to own them. So, yeah, small accounts buy CMOs, but they don't actively trade them. Typically, they have an MBS trader (or even an Agency/MBS trader) who also handles the limited CMO inquiry. At the primary dealers, every single specialist's account has a shot a new CMO offering before the dealer desk can market to the regionals.