Monday, September 29, 2008


I don't pretend to understand credit swaps, but this example, from today, made an impression:

NEW YORK, Sept 29 (Reuters) - The cost of protecting Wachovia Corp's (WB.N:QuoteProfileResearchStock Buzz) debt with credit default swaps fell on Monday after news that Citigroup (C.N: Quote,ProfileResearchStock Buzz) was buying Wachovia's banking operations.

Wachovia's five-year credit default swaps fell to about 550 basis points, or $550,000 a year to protect $10 million of debt, from 25 percent in upfront payments plus $500,000 annually before the news, according to data from several dealers.

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Blogger Jason said...

Swaps and Derivative are rather simple to understand. Did you know that you can payoff all the sub prime loans for $536,964,808,868. If you payoff the loans of those that had been late in the last 12 months it would be $227,136,207,581. Its a ponzi scheme look at the banks Revenues and compare them with their net income the annual reports are available online.

9/29/2008 6:42 PM  

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