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Re: Credit Default Swap (CDS) question and answer
From: David Farber <dave () farber net>
Date: Sun, 19 Oct 2008 08:52:01 -0400
Begin forwarded message: From: Newmedia () aol com Date: October 19, 2008 6:35:35 AM EDT To: ChrisSavage () dwt com, karl () cavebear com Cc: dave () farber net Subject: Re: [IP] Credit Default Swap (CDS) question and answer Chris:Sorry, I'm not actually an expert on CDS but a 20+ year financial analyst following tech stocks. Dave and I are old friends and he's asked me to comment to help out his IP list audience.
I believe the main reasons why lending has dried up has nothing directly to do with the CDS business. The rules have changed so fundamentally that no one knows what will happen. As a result, cash is being hoarded.
If you think that you do not have enough reserves -- presuming that the regulators will demand less leverage before long -- then you hold onto whatever you have got. The alternative would be to lend it out and then find out that you will be forced to take in a new business partner when you must get a cash infusion from Dubai.
What has to happen, as the global finance system "de-leverages," is to give the banks some confidence that they can continue to do business and are not going to be nailed to the wall in six months.
Taking any strange (i.e. funny interpretations of the laws, etc.) actions on CDS would spook people badly.
Hope that helps, Mark Stahlman Shanghai China (at the moment)New MapQuest Local shows what's happening at your destination. Dining, Movies, Events, News & more. Try it out!
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Current thread:
- Credit Default Swap (CDS) question and answer David Farber (Oct 18)
- <Possible follow-ups>
- Re: Credit Default Swap (CDS) question and answer David Farber (Oct 18)
- Re: Credit Default Swap (CDS) question and answer David Farber (Oct 18)
- Re: Credit Default Swap (CDS) question and answer David Farber (Oct 19)
- Re: Credit Default Swap (CDS) question and answer David Farber (Oct 19)
- Re: Credit Default Swap (CDS) question and answer David Farber (Oct 19)
- Credit Default Swap (CDS) question and answer David Farber (Oct 20)
- Credit Default Swap (CDS) question and answer David Farber (Oct 20)
- Re: Credit Default Swap (CDS) question and answer David Farber (Oct 21)
- Re: Credit Default Swap (CDS) question and answer David Farber (Oct 21)
- Re: Credit Default Swap (CDS) question and answer David Farber (Oct 22)
- Re: Credit Default Swap (CDS) question and answer David Farber (Oct 22)