Replies

To: the invisib1e hand

Very good question. And since we are talking abound CDS (?) or similar “insurance” derivatives, here is a wider one:

Suppose there was about $11T-$14T in total mortgage market - that’s subprime (less than $1.5T) plus Alt-A plus prime, all. Some put the total securitized market (MBS / CDO) at $7T-$8T. Suppose there was about $60+T of “insurance” (CDS) on it. That starts to look like a “house” that has been a “wee bit” overinsured.

For comparison, the total loss in recent “stock market” value was about 40% or $8T.

18 posted on 12/30/2008 1:21:15 AM PST by CutePuppy (If you don't ask the right questions you may not get the right answers)

19 posted on 12/30/2008 1:22:13 AM PST by CutePuppy (If you don't ask the right questions you may not get the right answers)

Couple that circumstance with FASB 157, 20 years of “moral hazard”, and the likes of Barney Frank, Chris Dodd and friends, and you have a perfect storm.

22 posted on 12/30/2008 6:00:40 AM PST by the invisib1e hand (revolution is in the air.)

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