Ah, $58 trillion. That could be.
The problem is that if all the underlying securities went belly up the payout in aggregate would be only the amount of the underlying securities. Because there are layers and layers and circular dealings a single default would make counter-party A pay B pay C pay D pay A pay B pay C. The problem is each payment would be the amount of the defaulted security. So let’s say you are C. You demand D pay you and you pay B. But what if D is in trouble. Then you have to pay B but there is no guarantee that D can you so you cannot pay B, etc.
The Treasury is setting up a market that just clears these things. Everybody sells to the Treasury in the case of the default the Treasury pays once.
I am not concerned about naked short selling as long as the short seller puts up collateral. Naked short selling is a requirement in orderly OTC markets.
The Treasury is setting up a market that just clears these things. Everybody sells to the Treasury in the case of the default the Treasury pays once.
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Thanks, is this one of the details Pelosi, Reid and Bush should have explained?