CREDIT DEFAULT SWAPS CONTRACTS

Michael T asked:


Many assume that they use the current crisis is caused by CDOs containing mortgage. Yet another type of synthetic CDO is a CDO? Tion which consists of exchanges of defect cr? Credit ensures that the holder against defects in some of the comparisons? As m? S big worlds. The synthetic CDO? Tico 100 ensures the compatibility? As m? S greats defect and pay? 1/3o holder of the value of default if insurance compa 7? as, if 2/3rds defect 8 com? as, and if the full amount of 9 comparative fault? as. 6 com? As in the reference list of all feeling? Tico CDOs which have now failed to include the 3 banks, Lehman Brothers, Bear Stearns, and nationals of Iceland. Tambi? N include AIG, Freddie Mac and Fannie Mae is that? N failing part. GM and Ford are too? N com? As in the reference lists. The total value of synthetic CDOs sure? Tion is estimated at trillions of d? Dollars. The biggest? To the holders of synthetic CDOs? Tico is as big banks? the insolvency of GM and Ford should solve the problems of banks as being? trillion paid n d? dollars. However, the banks who created the synthetic CDOs? Tico convinced many municipalities and charities to be insurers of synthetic CDOs? Tion for a fee of 1% -2%. It appears as if the insurers of the synthetic CDOs? Tico pay insurance, the government changed? provide a guarantor? to banks and compa? car to offer as a guarantor? to municipalities. http://www.smartcompany.com.au/Free-Articles/The-Briefing/20081119-The-CDO-timebomb–how-it-works-and-why-it-could-sink-or-save-the -world-economy-Kohler.html

Bobbie asked:


Explanation of the crisis of credit (by Ben Stein) The crisis occurred (sobresimplificar largely) because the financial system allowed entities to place bets on whether the ignition mortgages were never paid. You didn 't have to have a mortgage to make bets. These bets, called Credit Default swap, are complex. But in a nutshell, they allow someone to benefit immense – staggeringly – if large numbers of subprime mortgages are not paid off and enter default. The benefit may be violently out of proportion to the number of true defects, because speculators can push down the price of instruments tied to the subprime mortgages far beyond what the real rates of loss. As I said, the profits here can be beyond imagination. (In fact, they may be so large that one might well wonder if the whole subprime fiasco was not set just to allow speculators to benefit violently in its collapse …) These credit default exchanges have been written (as insurance is written) as private contracts. There is no provision in the government of them. Who writes these policies? Banks. Investment banks. Insurance companies. Now should the buyers of these exchanges in the absence of credit trillion of mortgage debt to waste dollars. It is this responsibility which is the fathomless pit of liability for financial institutions in America. Because these giant financial companies never dreamed that the subprime mortgage securities could drop as they did not incorporate a potential liability for these CDS policies anywhere near their true liability – which again, is virtually unfathomable. They have no assets to pay off compensatory liability. This should never have happened. Now it happened, should the taxpayers pay to make the billionaire speculators whole on their bets? What should be done? Thanks Chebrew And whoever the downvoted – explain please, don 't just downvote of the donor without his input we …..