Lehman Credit-Default Swap Payout Could Climb as High as $365 Billion - GoFuckYourself.com

xmas13 · 10-11-2008, 03:01 PM

http://www.washingtonpost.com/wp-dyn...101003050.html

In what may shape up to be the most expensive payout ever in the credit-default swap market, sellers of insurance against a debt default by Lehman Brothers will have to pay 91.375 cents on the dollar to settle the contracts.

The results of a settlement auction held Friday imply that banks, hedge funds, insurance companies and other writers of the insurance-like swaps would have to come up with as much as $365 billion for buyers of the protection. But many of the firms on the hook may have taken steps to offset their obligations, which could minimize the blow, industry experts said.

Swaps are basically insurance policies bought by investors to protect against an investment such as a corporate bond losing all value if the company falls apart. The unregulated nature of the market, in which investors essentially bet on the likelihood of a default by a bond issuer, makes it impossible to say who owes how much to whom. But it is safe to say that selling default protection through the swaps turned out to be costlier than anticipated.

http://en.wikipedia.org/wiki/Credit_default_swap

A credit default swap (CDS) is a swap contract in which a buyer makes a series of payments to a seller, and in exchange receives the right to a payoff if a credit instrument goes into default or on the occurrence of a specified credit event, for example bankruptcy or restructuring. The associated instrument does not need to be associated with the buyer or the seller of this contract.

http://en.wikipedia.org/wiki/Image:C...lus_ debt.png

Derivative notionals held 2008Q2 was $182 trillion.

marketsmart · 10-11-2008, 03:04 PM

$5 trillion dollars is what its going to cost to get all this shit sorted out... $700 billion is a joke...

Ethersync · 10-11-2008, 03:18 PM

Anyone who thinks that even though we are printing up all this money we are going to go through a period of DEFLATION needs to pull their head out of their ass. We have a tidal wave of inflation on the horizon folks...

IllTestYourGirls · 10-11-2008, 03:20 PM

Quote:

Originally Posted by marketsmart

$5 trillion dollars is what its going to cost to get all this shit sorted out... $700 billion is a joke...

Yup between 2 and 5 trillion sounds just about right. We already have Obama and McCain saying we need MORE bailouts. These clowns are clueless.

GetSCORECash · 10-11-2008, 03:21 PM

Quote:

Originally Posted by marketsmart

$700 billion is a joke...

Yes it is...

IllTestYourGirls · 10-11-2008, 03:21 PM

Quote:

Originally Posted by Ethersync

Anyone who thinks that even though we are printing up all this money we are going to go through a period of DEFLATION needs to pull their head out of their ass. We have a tidal wave of inflation on the horizon folks...

Jim Rogers agrees with you:

We Are Facing an 'Inflation Holocaust': Jim Rogers
http://www.cnbc.com/id/27097823

Vendot · 10-12-2008, 08:00 AM

http://www.independent.co.uk/news/bu...mb-958699.html

Finally some good news....

Manowar · 10-12-2008, 08:02 AM

Quote:

Originally Posted by Vendot

http://www.independent.co.uk/news/bu...mb-958699.html

Finally some good news....

it just keeps spiralling downwards

Barefootsies · 10-12-2008, 08:25 AM

Vendot · 10-12-2008, 12:13 PM

Quote:

Originally Posted by Manowar

it just keeps spiralling downwards

Thats what i mean....... its great that it's spiralling down so we can watch it descend into the gutter. If it just collapsed instantly it would be kinda boring eh?

Then again, some say its better to burn out than fade away....

10-11-2008, 03:01 PM	#1
xmas13 Confirmed User Join Date: Dec 2004 Location: GFY Posts: 5,176	Lehman Credit-Default Swap Payout Could Climb as High as $365 Billion http://www.washingtonpost.com/wp-dyn...101003050.html In what may shape up to be the most expensive payout ever in the credit-default swap market, sellers of insurance against a debt default by Lehman Brothers will have to pay 91.375 cents on the dollar to settle the contracts. The results of a settlement auction held Friday imply that banks, hedge funds, insurance companies and other writers of the insurance-like swaps would have to come up with as much as $365 billion for buyers of the protection. But many of the firms on the hook may have taken steps to offset their obligations, which could minimize the blow, industry experts said. Swaps are basically insurance policies bought by investors to protect against an investment such as a corporate bond losing all value if the company falls apart. The unregulated nature of the market, in which investors essentially bet on the likelihood of a default by a bond issuer, makes it impossible to say who owes how much to whom. But it is safe to say that selling default protection through the swaps turned out to be costlier than anticipated. http://en.wikipedia.org/wiki/Credit_default_swap A credit default swap (CDS) is a swap contract in which a buyer makes a series of payments to a seller, and in exchange receives the right to a payoff if a credit instrument goes into default or on the occurrence of a specified credit event, for example bankruptcy or restructuring. The associated instrument does not need to be associated with the buyer or the seller of this contract. http://en.wikipedia.org/wiki/Image:C...lus_ debt.png Derivative notionals held 2008Q2 was $182 trillion. __________________ ICQ 557504926 Last edited by xmas13; 10-11-2008 at 03:04 PM..

10-12-2008, 08:25 AM	#9
Barefootsies Choice is an Illusion Industry Role: Join Date: Feb 2005 Location: Land of Obama Posts: 42,635	__________________ Should You Email Your Members? Link1 \| Link2 \| Link3 Enough Said. "Would you rather live like a king for a year or like a prince forever?"

10-11-2008, 03:04 PM	#2
marketsmart HOMICIDAL TROLL KILLER Industry Role: Join Date: Dec 2004 Location: Sunnybrook Institution for the Criminally Insane Posts: 20,419	$5 trillion dollars is what its going to cost to get all this shit sorted out... $700 billion is a joke...

10-11-2008, 03:18 PM	#3
Ethersync Confirmed User Join Date: Mar 2008 Location: London, Saint-Tropez, Bermuda, Moscow Posts: 5,289	Anyone who thinks that even though we are printing up all this money we are going to go through a period of DEFLATION needs to pull their head out of their ass. We have a tidal wave of inflation on the horizon folks...

10-12-2008, 08:00 AM	#7
Vendot Confirmed User Industry Role: Join Date: May 2002 Location: Malaysia Posts: 3,376	http://www.independent.co.uk/news/bu...mb-958699.html Finally some good news....