US CREDIT-Large defaults could test (the $62 Trillion) CDS market

[UpInArms]

Source: Reuters

NEW YORK, July 18 (Reuters) - The credit derivative market,
which has ballooned to over $62 trillion to dwarf the
underlying debt market, has yet to experience the default of a
significant issuer since its rapid growth.

Corporate defaults, however, are on the uptick and expected
to accelerate, and the number of companies with credit default
swaps trading at distressed levels are also on the rise,
indicating the market may soon be tested.

"I don't see a lot of risk around one big event. I think
the market, particularly following the auto sector stresses in
2005, has prepared for such episodes," said Matthew Mish, high
yield credit strategist at Barclays Capital in New York.

"I'm more worried about an environment characterized by a
high frequency of defaults among large issuers," he added. "The
related settlement and back-office issues would be more complex
and laborious. But I would not expect a breakdown in the
market."

Some lags in processing credit derivative trades have made
regulators and market participants nervous there could be
confusion if a large borrower, or even worse a counterparty,
failed.

<snip>

Volumes in credit derivatives were significantly smaller,
at less than $3 trillion, when the market last saw significant
corporate defaults, capped by Enron Corp in 2001 and WorldCom
in 2002.

Read more: http://www.reuters.com/article/bondsNews/idUSN1859388220080718

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The credit derivative markets have grown from $3 Trillion in 2001 to $62 Trillion - I repeat - $62 Trillion - in 2008?????

:wtf:

:omg:

:nuke:

we're all gonna die

:scared:

[SpiralHawk]

1. Nothing to worry about. Republicon 'conservatives' are in charge.

Ooops, excuse me, I forgot that the word 'conservative' is just a propaganda meme that republicon homelanders like to bandy about to obscure their real nature, while they rape and pillage the USA financial landscape, trashing the economy, the environment, the armed services, and ethics.

[indepat]

3. Succinctly sums up 'pukedom

:D

[indepat]

2. Not smart enough to understand how the credit derivative market can dwarf the underlying

market. Do they slice, dice, and repackage, then slice, dice, and repackage some more ad infinitum? :shrug:

[bemildred]

5. Think re-selling the same "assets" over and over after "re-packaging" them.

Like a Ponzi scheme.

[indepat]

6. Seems nobody knows what they got and everyone except the first in, first out will get

shafted: gads, this ponzi scheme possibly dwarfs the Social Security scheme Congress decided to foist on the American public instead of having made it an actuarially sound retirement system as it easily could have, but then the gdsobs could have not raided that lock box for countless decades. :D

Edited to add final phrase

[ozymandius]

12. Take one eighteen ounce pie.

Take one picture of the pie. Divide the picture into six pieces. Sell one picture along with pictures of other pie slices for the original cost of the one pie.

Take another picture of the pie. Repeat above steps.

Soon enough, buyers will just figure out they only have pieces of paper when they want pie.

[Theres-a]

4. :faints: nt

[ozone_man]

7. When the margin call finally comes,

it's going to collapse this house of cards. The implosion will be so great I wonder if it will cause a black hole. :think:

[FarCenter]

8. $62 trillion seems small -- notional value of all contracts > $600 trillion

The $62 trillion must be just credit default swaps.

See the statistics on Over The Counter derivative published by the Bank for International Settlement, Basel, Switzerland.

http://www.bis.org/statistics/derstats.htm

[skoalyman]

9. but the fundies say the funndymentals are sound

:sarcasm: mean while over at the fed there :toast: :toast: :toast: havin a sweet ole time there too stooper stupid to care:puke:

[Tutonic]

10. I'll say it again--anyone with $1.00 or more invested in Citi should

get to a bank or mortgage office on MONDAY. CITI invested in the junk bonds, junk mortgages, junk investments. They made lots of money when things were going good but you'll remember CITI like you remember TWA when it all shakes out.

[ozymandius]

11. Every part of a pine tree is edible. Just saying.

One frond has more vitamin C than an eight ounce glass of orange juice.

The bark can be made into a tea. The trunk fibers can be shredded and prepared like shredded wheat.

---

A friend in college spent three years living off the land. He carried a number of books full of information about edible wild plants: how to identify and prepare. I wonder how to find those.

[skoalyman]

13. thats something I never knew we used to have more then a dozen

growing in our yard when I lived in Louisiana used to chew on the pine needles.