[raybbr]

I really hate these articles that carry on a discussion about an anagram (CDS) without EVER TELLING US WHAT IT MEANS.

[dennisw]

CDS should be banned in the USA and if the Wall St wise guys say "we will trade them in Abu'Dhabi or London or Singapore" tell them to GTFO and go do it

Which brings us full circle: an attack on CDS is an attack on excess liquidity, which is an attack on the global asset/liability imbalance (as world GDP and otherwise output has no chance of catching up with the liquidity that is currently available), which is an attack on fiat money, which is an attack on the perpetually low price of gold (because if and when derivatives and securitizations are done away with and tangible assets regain their true value, gold would go up by at least the same magnitude that fiat currencies are devalued), which is an attack on the heart of our broken financial system itself, and, an attack on the Federal Reserve, the Fractional and Central Banking System in principle.

CDS jack up the money supply with fake insurance contracts, fake promises to make good on the "default insurance" being issued by the lying Wall St pond scum that issue them to each other. You insure me with CDS and I'll insure you w CDS is the game. They increase the fictional money out there

[dennisw]

doom and gloom ping list

[StAnDeliver]

The comments are always good: "Banks" which are hedge funds in practice, shouldn't be trading CDS with taxpayer backed funds."

That's basically it in a nutshell, absent that other small item at the end about the fiat system being essentially broken forever.

[StAnDeliver]

Also another good line from the comments: Buffet made $1.44 billion 3Q on these kinds of DCasino bets -- at the same time Berkshire's NetJets division planned to lay off 750 workers. Faux money + jobless recovery = 1-Term Bobo.

[CRBDeuce]

Using a treatise on capitalism and derivatives, with the headline of 26 trillion of CDS, Einhorn is doing what the left does best...revisionism. Hiding the problem in a pedantic rant. The problem was that pirate CDS speculators were first buying (on the cheap) as much naked CDS (on a corporation’s debt) as they could get their hands on, from as many counterparties who were willing to make the bet that they could find. Then the same group began their bear raid by naked shorting that same corporation’s equity, driving up the value of their naked CDS holdings. There was no hedging, the pirate speculators had no ‘skin in the game’, didn’t hold any debt of that corporation. Just a more effective way to drive a company out of business in a bear raid. By both shorting (naked, since the SEC allowed it), and holding naked CDS (not hedging positions). By not mentioning this effective (terrorist) strategy in his ‘treatise’, we can only assume that Einhorn was one of the many players. The only goal of this treatise is obfuscation (or revisionism).

[org.whodat]

Some fools have a hard time understanding, the when Phil Gramm changed the game on this garbage , we were on a one way street to blow up the economy. Fool bankers, leveraged their banks 400 to one because they were god and there was no down side. The dirt balls in AIG wrote billions and billion of these fake insurance and had no ability to perform on their contracts. If you sold stuff and did not deliver you would go to jail. In short, lets start the perp walk and the terminate the CDS business forever.

[Chgogal]

“As the graphic shows, derivatives account for 1,000% of world GDP, in essence allowing the world to believe fiat money is worth something only courtesy of financial sleight of hand which involved derivatives and securitizations. Yet all those calling for an end to CDS also have to realize that due to CDS intertwined nature, the world fiat system would need to do away with all derivatives (not just CDS), and when you do that you basically eliminate the other hybrid asset classes: securitizations being chief among them. What this would leave us with is a liquidity pyramid which ends with bank loans, which are much more manageable and whose risk can be controlled. It would also leave the world with a fiat currency system, which would lose about 10x of its value overnight, thereby leading to an instantaneous and global unwind of fiat money, and rolling waves of domestically denominated hyperinflation. A spectacular race to the bottom of the asset pyramid. And who will rather commit suicide than see that happen: why the Federal Reserve of course.”

Please tell me that all the world's institutions are not playing Musical Chairs with all this crap floating around? Oh, BTW, when telling me that all is well, you HAVE to MEAN it. : }