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B4 The Bell Tuezelday October 19


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JPM -3%

 

one by on ethe big derivative players are being shot.

 

This is a big change

1) Counterparty risk ratings are dependent on capital base (MMC split 2:1 in a most unfortunate way, AIG has taken a severe beating)

2) Insurance companies are the buyers of last resort in the corp bond market (one of the primary reasons corporate spreads are so tight)

3) One of the reasons stocks have been well bid is because of corporate spreads. We are starting to see spreads widen in insurance, car makers and select financials with large derivative exposure.

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Since insurance companies are some of the largest equity holders in the world, it may be that this thing will begin to feed on itself, as many raise capital to cover class action lawsuits. If Spitzer is in the process of uncovering practices that are common throughout the insurance industry, LOB.

 

I wonder if even Buffet will be implicated.

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The Fed, which is made up of large private international financial institutions, would have to monetize the difference.

 

Why should they do it? They didn't do it in the 30's.

 

"Liquidate Everything" was their motto.

That's certainly the crux of the matter.

 

What MAY HAVE changed is that the 'private financial institutions' feel they can manage in an inflationary environment ... whereas deflation means their assets get wiped out, or nationalized, or both.

 

If I were a bankster, I know which scenario I'd choose ... ;)

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Anyone with news on the plane crash in Atlanta?

haven't seen anything, but I'm confident it's not terrorism

small plane headed for Venice Florida in bad weather crashed near commercial building.

 

looks like an unfortunate accident

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JPM -3%

 

one by on ethe big derivative players are being shot.

 

This is a big change

1) Counterparty risk ratings are dependent on capital base (MMC split 2:1 in a most unfortunate way, AIG has taken a severe beating)

2) Insurance companies are the buyers of last resort in the corp bond market (one of the primary reasons corporate spreads are so tight)

3) One of the reasons stocks have been well bid is because of corporate spreads. We are starting to see spreads widen in insurance, car makers and select financials with large derivative exposure.

Uh huh ...

 

Sounds like the first steps in one plausible scenario for an 'unwinding' of deRIBITives -- (so called because they're denominated in 'green frogskins' ... a/k/a dollahs).

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Rog: Yep. I used to cover some insurance companies. They would buy the wierdest crap at the tightest spreads. Man o man I bet the street is really pissed at Spitzer.

Dead Man Walkin'

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Anyone with news on the plane crash in Atlanta?

haven't seen anything, but I'm confident it's not terrorism

small plane headed for Venice Florida in bad weather crashed near commercial building.

 

looks like an unfortunate accident

Don't forget Venice was where the 'magic Dutchman' Rudy Dekkers and his flying skool were based ... :o

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