Economics Of Contempt: Newspaper Front Pages During The
Newspaper front pages during the financial crisis. Posted by Economics of Contempt at 5:47 AM. Recently I was talking to someone about the mainstream press's coverage of last September's earth-shaking events, and that got me thinking about what the major newspapers were highlighting on their front pages. I thought it would be interesting to see
Actived: Saturday Feb 22, 2020
Economics of Contempt: Upfront CDS with Fixed Coupons
Upfront CDS with Fixed Coupons. 2013 are now "off-the-run" — the current 5-year contract referencing GE, which is "on-the-run" because 5-year contracts are the most liquid, matures on March 20, 2013. Moreover, to match the cash flows of the two contracts, the dealer has to find a counterparty willing to make a sizable upfront payment to
Economics of Contempt: Why why shouldn't force banks to lend
Why why shouldn't force banks to lend Posted by Economics of Contempt at 2:12 PM A surprisingly common criticism of the TARP is that it didn't require banks receiving bailout money to lend to small businesses and consumers.
Economics of Contempt: Merrill and the Basis Trade
Felix Salmon is wondering, after reading this WSJ article, if the main source of Merrill Lynch's staggering $15bn loss in Q4 was the infamous "basis trade."In a basis trade, an investor buys a corporate bond and simultaneously buys CDS protection on the bond. There's a "negative basis" when the price of the CDS is lower than the price of the bond (usually defined by the bond's asset-swap
Economics of Contempt: Getting the Signals Crossed
As soon as Obama had Bush request the funds, the race was on to figure out which bank was in trouble. At first everyone thought it was Citi, since it had just announced plans to raise capital by breaking itself up, including spinning off Smith Barney in exchange for $3bn from Morgan Stanley.
Economics of Contempt: Tax Rebates as Stimulus
The problem is that such a stimulative effect is TEMPORARY and does not address the fundamental weakness in our economic system. The simple fact is the US produces less and sells less while globalization has forced Americans to compete for jobs with a world-wide workforce, creating fewer taxpayers (when jobs are "off-shored") and wage stagnation.
Economics of Contempt: Thoughts on regulating the CDS market
I've received a few requests for my thoughts on various forms of regulation for the CDS market. When I was working on credit default swaps in the first half of this decade, during the big push to standardize CDS contracts, I never in my wildest dreams thought that CDS would become a popular topic of discussion, or that anyone outside the world of structured finance law would ever willingly ask
Economics of Contempt: January 2009
The fixed coupons will supposedly be set at 100bps and 500bps (depending on credit quality). 2013 are now "off-the-run" — the current 5-year contract referencing GE, which is "on-the-run" because 5-year contracts are the most liquid, matures on March 20, 2013. Posted by Economics of Contempt at 11:24 PM.
Economics of Contempt: Two Major Tests for Bank Regulators
There are, in my opinion, two major issues that still have to be determined by national regulators: (1) the run-off rate for market valuation changes on derivatives transactions; and (2) the definition of, and run-off rate for, so-called “non-contractual contingent funding obligations.” This post will address the first issue.
Economics of Contempt: Soros is wrong
The whole post is off. He claims the following: "Putting these three considerations together leads to the conclusion that Lehman, AIG and other financial institutions were destroyed by bear raids in which the shorting of stocks and buying of CDS amplified and reinforced each other." My understanding is that we are in Debt-Deflation. A Calling Run.
Economics of Contempt: More AIG Counterparty Nonsense
Yes, AIG really has to pay its counterparties in full. The whole point of rescuing AIG was to keep it out of bankruptcy, and short of bankruptcy, there's no mechanism for forcing AIG's counterparties to take a haircut. But the ProPublica article really goes off the deep end when it says: