from The Big Picture
January 26, 2009 § Leave a comment
key here is the thought about the CDS.clearning this us, concepturally at first,and in dollar terms if necessary, is one of the main issues right now.
Below is the link to the NYT column today by Gretchen Morgenson regarding Credit Default Swaps. I really appreciate her attention to me and my firm, but more for leading with Sylvain Raynes and also including Robert Arvanitis, both of whom have helped me enormously over the past year to sharpen my distinctions on risk.
Of interest, I agree with Bob’s view that as much as half of the remaining CDS is not an issue since many of these positions do match against opposite exposures, but the remainder is a rancid pile of under-collateralized wagers on default events that are all heading toward 1 in terms of P(D). Thank to the FASB and the SEC for accelerating the deflation via fair value accounting! Who would have thought that accountants, who are some of the nicest, smartest people you will ever know, would destroy the world!