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To bottom or not to bottom, that is the question


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Doc or anybody with some knowledge of CDS, is it possible to declare all outstanding CDS void?  (or at least those that are held by parties that don't own the underlying debt?)

 

what would be the implications? the CDS market is a massive guillotine hanging over the markets, perhaps the lever has already been pulled

 

http://www.moonofalabama.org/2008/09/solution-declar.html

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I think this is overblown. The number on that site make sense. $65 trillion in swaps on $6 trillion in MBS. While that seems a little high for straight MBS, it's not out of line for CDOs based on MBS. There's not a lot of room there for a disaster all that much larger than on the mortgages themselves. There's swaps at several stages, only one of which has to get paid in an event. Then it mentions reinsurance, which means another block that's just passed from one party to another. It all adds up to which party pays the loss. The question noone can answer is how much of it is naked bets. 10 to 1 doesn't seem farfetched to be more than insurance bought by involved parties. The proof of this is in the settlements. We've seen a few, and even the pessimistic claims aren't far out of line with what the estimates for losses would be without the swaps. The publicized numbers are shockingly, almost unbelievably small.

 

What I want to know is how many players were smart enough to get a CDS on their CDS provider. I'd guess a lot.

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The idea of Social Security is that current workers are paying for current retirees.

 

Your money are not yours. They belongs to the folks who are already retired. You owe them money. Both by law and by moral. Just because they've protected your future fighting in multitude of past wars and because they've paid for your education by their taxes.

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Sorry, you are wrong. My money is my money, but it is being stolen against my will by the government.

 

And the current receivers of Social Security for the most part have not fought in any wars, nor have they paid for my education. Here in California the education system is funded by property taxes, another boondogle.

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The only technical question I have for the wise ones tonight is - will ascending continue for the DJI in a bear market like it did for the SPX during a bull market?

 

Couple charts clipped and put together from:

Sy harding http://www.streetsmartreport.com/comm4.html

Tsp Talk? http://www.tsptalk.com/comments_archive/co...s_10_23_08.html

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(scratch that)

 

Ascending is kinda the definition of a bull market -- higher highs, higher lows.

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Sorry, you are wrong. My money is my money, but it is being stolen against my will by the government.

 

And the current receivers of Social Security for the most part have not fought in any wars, nor have they paid for my education. Here in California the education system is funded by property taxes, another boondogle.

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Social security is such a scam. Originally, that money was supposed to be put in some type of trust. Well, it never was, but was spent by our communist government just as fast as it came in. Today, as always, the payments to social security obligations come out of the general fund. There is no way the government can pay social security to baby boomers when they are all eligible to collect. Such a joke. Man, we need to just start over!!!

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No problem, there's plenty more to go around.

 

"As of October 17, the S&P 500 closed at 940.55. Today it is 876.77. That's a drop of 6.79%. That also means that the price to book of the S&P 500 is now 1.58. It was 2.5 earlier this year, the 20 year average.

 

1982 is a year that is commonly said to have been when the 20 year bull market began. The S&P 500 price to book ratio then was 1.0.

 

So, therefore, there could be a further 30% drop in stock prices until the real bottom is reached. Anymore than 30%, and the S&P 500 average would be trading below book value, which would seem strange.

Many stocks are already below book value."

Free email commentary by Trader Review  http://www.traderreview.com/

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If I correctly remember the line from the movie Heaven can Wait, the owner of the LA Rams was asked why he sold the team.

He replied, I was forced to. When asked how he was forced to, he replied

"I was offered $16 million over book value".

 

There was a time when only suckers paid over book value.

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