bonddude

CDS Clearing Houses Could Magnify the Market Disruptions

The above comment represents the fundamental misunderstanding in popularly advertised thinking about cds derivatives. They are not ALL garbage. Some contracts represent entities with an insurable interest that are actually collateralized. While it is true that the pricing of all of these products is relatively frozen many have actual underlying value. Nevertheless, distinctions and need to be made between the side bet types and collateralized of contracts types by regulators. This will result in a continued and painful selloff in most asset classes until, some have ventured, a 90% contraction in valuation has been effected in the cds markets.

Conclusion, we have not reached the bottom in selling of stocks, gold or oil. The next wave will start when trading in cds contracts begins. JMHO
BG