[Paul Nollen]

Dit lijkt mij een interessant stukje over de CDS al moet ik toegeven dat ik het nog niet snap maar misschien zijn hier kenners aanwezig die enige toelichting kunnen geven

http://www.prudentbear.com/index.php...w?art_id=10241

It became clear in the Lehman bankruptcy that CDS could be used to force a company into insolvency, particularly a financial institution with high leverage. The large amount of CDS outstanding and the low cost of credit protection against a good quality borrower give "shorts" seeking to push a house into bankruptcy an immensely useful tool that they previous lacked. The obvious step at that point would have been to ban CDS, since they generate such a destructive conflict of interest. Instead, the Fed subsidized the market, by bailing out AIG, the least intelligent of the CDS writers, to the tune of $180 billion, thus allowing Goldman Sachs and other houses to profit on the various bankruptcies sufficiently as to pay out everybody's bonuses for the year. Naturally, since none of the majors lost significant money through CDS, the market went on playing the game. CDS were used to accelerate the bankruptcies of General Growth Properties and Abitibi-Bowater within the last few months, and played a significant and negative role in the prolonged restructuring of General Motors.

Now a small house, Amherst Holdings, has beaten the Wall Street titans at their own horrid game, according to the Wall Street Journal. It found a pool of $29 million of particularly repulsive California subprime mortgages, then sold $130 million notional of CDS on them, pocketing around $100 million in premiums, since this waste was so toxic the big houses were prepared to pay up to 80% to insure against it. Clear so far? It sold insurance for 4½ times the maximum possible loss, but hey, that's finance.

Then it quietly went round and paid all the debts of the lucky homeowners owing the $29 million. At that point, since there were no defaults, it was able to keep the $100 million in premiums (net of the loan repayments, a $70 million profit). Simple, really! Wall Streeters are furious and, inevitably, suing, but in fact Amherst's coup was a perfectly legitimate use of this corrupt and foolish structure, far more so than many of the shenanigans undertaken by the likes of Goldman Sachs – after all, Amherst's operation PREVENTED a number of defaults and foreclosures.

George Soros says CDS should be banned. I worry about the periodontal damage caused by teeth-grinding when I find myself agreeing with Soros, but in this case, he's right (he was right on the pound in 1992 as well; fortunately for my dental care, he's been right on no other occasion that I can recall). However, not only have the feds made no move against CDS, they have subsidized the market to the tune of $180 billion of our money, thus ensuring the toxic technique's return to luxuriant growth.

Paul