Reggie Middleton

On Goldman and CIT: No Free Lunches

"You have "literally" no idea how markets work dude"

Okay, smarty pants. Why don't you educate us on how a CDS is priced on the ABX, and exactly what the tracking error, if any, is on the actual liklihood of an event of default? What is the definition of default on the contracts written on the ABX?

You can also explain to us if there is any discrepancy and/or relationship between the actual credit default (or its probability) and the ability of the trust to pay out to avoid default.

I admit that I am a neophyte in practically all things, so my ears are open.

You say I know nothing of how markets work, but the CDS space is not truly a market, it is a space run purely by an oligarchy of broker/dealers with the Golden formula of pricing/clearing/settl... A true market has price discovery emanating for asks and bids between all members of a community, not gate keepers on Wall Street. Think stock market, housing market, bond market, currency market.