Tom Jacobs

$7.9 Billion Kazakhstan Bank Loss Shows Why CDS Must Be Regulated

This whole argument regarding the requirement that one show an exposure via bond or loan to justify a short position is misguided and more often than not an argument for the elimination of CDS in general. What about the fact that all the sellers of protection now have an interest in delaying bankruptcy, again without a traditional bond or loan position. You simply cannot have a market if the only justification for taking a short position is proving a pre-existing long position. Why not ban futures markets since most of the speculators who permit physical holders to hedge have no economic interest in taking delivery of the commodity in question?

JPMorgan, Amex Issue Non-FDIC Backed Debt

You are not comparing apples to apples here. A 120 bp spread for CDS needs to be added to the TED spread equivalent at term to compare to an issue over Treasury. On Friday per the H15 statistical release,

www.federalreserve.gov...

the difference was 46bp using CMT for 5 Year Treasury, lowering your balance sheet cost to about 110bp for the JP Morgan placement. Still a big number.