3 replies to this topic

[phil_hubb]

These $850 billion in mis-priced CDO's are more than just a time bomb. They're a series of high explosives.
And from the looks of things, every time one of them gets tossed into the street, there's a decent chance that it's going to explode. The market for these at par value is too illiquid. Nobody seems to want them at or even near par.

And then there's the ripple upstream to alt A.

It shouldn't surprise anyone if one or more hedge funds with a modest portfolio of CDO's or subprime MBS is positioning themselves short the Ibanks, BSC, LEH and others and writing naked calls out the wazoo.

And then they start tossing their "CDO bombs" onto an already panicky Wall Street to force a repricing of several tranches of these derivatives, (combined tranches represent over a trillion dollars in collateralized debt instruments)

This repricing of this collateral forces margin departments to start liquidating various institutional client portfolios.

And that's how BSC's snowball today can become Wall Street's avalanche tomorrow.

jmo

[BigBadBear]

another disguised crash post ?

[selecto]

I took it to be an intelligent observation about the markets. You ought to try it sometinme.

[xe2dy]

I took it to be an intelligent observation about the markets. You ought to try it sometinme.