fran

How Much Does the Bailout Really Cost?

we can't know that which is not yet known. someday this type analysis can be performed with valid results. after we've stuffed enough worthless digital dollars into the the void created by an excessively infated[worthless] past economy. stay tuned. for how long i hazard no estimate. what are the odds that it's done correctly? what are the consequences with correct/incorrect stuffing? these are worthy subjects for discussion, as they will affect us greatly.


On Nov 30 12:45 PM CaptainJJack wrote:

> Axelrod608,
>
> I believe the $130 Trillion number is the total swap market notional
> amount, which includes not only credit swaps but interest rate swaps
> and other swaps.
>
> Since both sides of the swap are usually counted, and because many
> of the larger swaps were divided among many counter parties, the
> numbers you quote WAY overstates the true exposure.
>
> I seriously question whether there is a lot of unfunded exposure.
> I am personally aware of swaps done where Lehman was the intermediary,
> and as part of transaction, the counter party with losses had to
> post collateral as losses mounted. The swaps were settled as specified
> in the contracts even though Lehman was bankrupt.
>
> In fact, it was the collateral that took AIG down even though it
> is not likely that AIG will ever actually have to pay out any losses
> on many of the CDOs they wrote the credit default coverage on.<br/>
>
> So, until I see something otherwise, I do not believe that CDS market
> is in the trouble you indicate. There certainly are losses, but the
> losses are being funded and are likely to be paid as the contracts
> specify.