Egodeus

Credit Default Swaps: The Show Isn't Over

Options, futures and warrants are derivates, they're a contract to buy (call) or sell (put) a stock/valuta/commodity at a certain strike price in the designated future. With a bullish/bearish straddle or hedge, depending if you forsee a down/upward movement or fluctuation around an equilibrium strike price, you can minimize risk exposure, while getting a reasonable leverage.

Chewing on the FDIC List of 'Problem' Banks

It might be greatly exagerated investor behaviour. The fear after the collapse of Bear Stearns still are fresh on financials. Take in mind that the market capitalisation of WM is 1/4 th of it's actual worth. (75% discount is a lot). If WM is going to get taken over, I doubt it will settle for such a big discount. Sources of the FDIC are reliable, if they were not, the US economic credibilaty comes under question and will have a very hard time in the next USTR negotiations.

Time To Bail Out WaMu?

Washington Mutual has enough cash to buy all of it's stocks itself...

Stunning Reversals: Is This a Market or a Casino?

Oh, the Central Banks play the roll of Bondwriter for the respective countries, to avoid missunderstanding.

Stunning Reversals: Is This a Market or a Casino?

NO! Fredie and Fanny are Commercial Banks. Only the Federal Reserves is allowed to write out Government Bonds Taxpayers are paying the governmnet to reduce its loss in Government Bonds, held by the Federal Reserves and Central Banks of countries. Those government institutions can lend their money at the IMF if everything gets out of hand too much...

Stunning Reversals: Is This a Market or a Casino?

No surprise the dollar rises, with Fanny and Freddy off of the Federal Reserves balance sheet on the liabillities side and an increase in government bonds (assets) to pay it off the difference, there is a major decline in M(oney) while demand is still high. Hence I think the dollar will appreciate even further vis-à-vis the rest of the valuta of major economies. One upside, since the capital destruction will (theoretically) cause deflation (PV=(M(t=0)-M(t=govt.b... out))*Y), assuming the drop in confidence will not drop below the point that consumer spending will stop entirely and the decelleration of the velocity of money will completely negate the capital destruction, then again retailers will have to drop their prices to get any revenue at all for consumption and thus the velocity of money to resume.