CaptainJJack

David Einhorn Increasingly Concerned About Dollar Crisis, Hoarding Gold

For the life of me, I do not see where a regulated market, similar to the markets for options and futures, would not solve 95%+ of the problem.

I understand that there are some situations where the standard contract would not work well, but that often happens in futures markets, and most of the time, the basis risk is far less than the risk you are trying to hedge.

With a regulated market, the contracts "settle" each day, in cash, and leverage, while high, is controlled by contract.

I can see why many do not want to have even the margin money tied up, and that, I think, is the primary appeal of the current CDS market.

But, that is what got us into trouble in the first place, and anyone doing a large transaction today almost always has to have some escrow to back up the guarantees, anyway.

Am I missing something?