tag:blogger.com,1999:blog-4490468598422095060.post5991675448419152951..comments2024-03-17T07:55:12.096-07:00Comments on FOFOA: Today's (quote-unquote) "Gold"FOFOAhttp://www.blogger.com/profile/17152544684132776239noreply@blogger.comBlogger508125tag:blogger.com,1999:blog-4490468598422095060.post-30291797193139229132012-03-11T19:18:16.244-07:002012-03-11T19:18:16.244-07:00Thanks, JR. That was both thoughtful and helpful....Thanks, JR. That was both thoughtful and helpful.Edwardohttps://www.blogger.com/profile/03613197383283896190noreply@blogger.comtag:blogger.com,1999:blog-4490468598422095060.post-31480690156960728452012-03-11T14:06:09.357-07:002012-03-11T14:06:09.357-07:00Cont.
FOA: It's no accident of nature that ou...Cont.<br /><br /><b>FOA: It's no accident of nature that our world monetary structure embraced derivative expansion as it has over the last ten or twelve years. I think we can say that this modern creation of risk management began around 1988 or so. (It's funny, but I remember living in San Diego and reading a paper about a gold company called Barrick that just started only a few years JRhttps://www.blogger.com/profile/16345441084565082627noreply@blogger.comtag:blogger.com,1999:blog-4490468598422095060.post-33174433878008365582012-03-11T14:05:29.608-07:002012-03-11T14:05:29.608-07:00cont.
The two main risks that are hedged today ar...cont.<br /><br /><b>The two main risks that are hedged today are default and currency risk. The primary instruments for hedging these risks are credit default swaps (CDS) for the former and interest rate swaps (IRS) for the latter. But the sheer number of promises that have been issued (for a fee) has become so large that it has now become the market driving force.<br /><br />Think about this. JRhttps://www.blogger.com/profile/16345441084565082627noreply@blogger.comtag:blogger.com,1999:blog-4490468598422095060.post-58687637068491818132012-03-11T14:05:11.767-07:002012-03-11T14:05:11.767-07:00Hi Edwardo,
Gold: The Ultimate Hedge Fund
Today,...Hi Edwardo,<br /><br /><a href="http://fofoa.blogspot.com/2010/01/gold-ultimate-hedge-fund.html" rel="nofollow">Gold: The Ultimate Hedge Fund</a><br /><br /><b>Today, the big money is all hedged. Almost no one with a sizable account holds only long position bets. The market isn't balanced by 50% betting on one side and 50% betting on the other. It is balanced within each portfolio through JRhttps://www.blogger.com/profile/16345441084565082627noreply@blogger.comtag:blogger.com,1999:blog-4490468598422095060.post-30743323413650376682012-03-10T20:21:43.171-08:002012-03-10T20:21:43.171-08:00Edwardo,
thanks for the "margin call" c...Edwardo,<br /><br />thanks for the "margin call" comment. That makes sense to me.<br /><br />I also agree that if you have to buy insurance on your neighbors house in order to not lose yours, something is seriously wacked!Wendyhttps://www.blogger.com/profile/17448815628676884529noreply@blogger.comtag:blogger.com,1999:blog-4490468598422095060.post-65673887953736116092012-03-10T19:48:16.361-08:002012-03-10T19:48:16.361-08:00Has anyone (not here necessarily) bothered to poin...Has anyone (not here necessarily) bothered to point out that the mere fact that entities feel the need to resort to purchasing CDS "protection" is prima facie evidence that debt, including, of course, sovereign debt, is a piss poor place to preserve one's hard earned (or inherited) boodle. <br /><br />And now the entire CDS paradigm, if one can even describe these fearsome and Edwardohttps://www.blogger.com/profile/03613197383283896190noreply@blogger.comtag:blogger.com,1999:blog-4490468598422095060.post-21728507718016606612012-03-10T14:52:10.448-08:002012-03-10T14:52:10.448-08:00Edwardo,
AKA "margin call."
Yes, this ...Edwardo,<br /><br /><i>AKA "margin call."</i><br /><br />Yes, this is what killed AIG in 2008 - once they lost their AAA, the had to post collateral. Suddenly, this was a lot.<br /><br />For CDS on Greek government debt, this must have happened around Aug/Sep/Oct 2011. You might see the funding stress in LIBOR (was perhaps too fudged to see).<br /><br />VictorAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-4490468598422095060.post-72193302418793301272012-03-10T14:49:42.410-08:002012-03-10T14:49:42.410-08:00AD,
was there a statement by the German CB? Do yo...AD,<br /><br />was there a statement by the German CB? Do you have its precise wording? I thought there was something, but now cannot find its anymore (they must have put the article into google translate, so may just be confused)<br /><br />VictorAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-4490468598422095060.post-22309104313187942622012-03-10T07:53:20.301-08:002012-03-10T07:53:20.301-08:00...This means when the market price of the CDS goe......This means when the market price of the CDS goes up (because people think the default becomes more likely), the issuer of the CDS already transfers cash to the holder.<br /><br />AKA "margin call."Edwardohttps://www.blogger.com/profile/03613197383283896190noreply@blogger.comtag:blogger.com,1999:blog-4490468598422095060.post-82578695366755313752012-03-10T02:11:09.502-08:002012-03-10T02:11:09.502-08:00VtC,
having said that: Forget about the german gol...VtC,<br />having said that: Forget about the german gold. It is gone and will never ever go back to germany. The german government is just a big fat joke, having no balls at all.<br /><br />What might be much more interesting are the swiss people:<br />http://www.goldinitiative.ch/initiative/index.html<br />If I have a little bit of confidence into democracy and the will of the people left, it isAdvocatusDiabolihttps://www.blogger.com/profile/05290930478826481037noreply@blogger.comtag:blogger.com,1999:blog-4490468598422095060.post-6111902492233799362012-03-10T01:56:10.833-08:002012-03-10T01:56:10.833-08:00VtC
Jack Gutt zu BILD: „Es gibt Listen mit allen B...VtC<br />Jack Gutt zu BILD: „Es gibt Listen mit allen Barren. Jeder Barren hat eine Nummer, einen Stempel für den Reinheitsgrad des Goldes und ein Siegel.“ Die deutschen Goldbestände können also nach Recht und Gesetz gezählt werden. Im Bundestag wächst der Druck:<br /><br />Jack Gutt (FED) to BILD: "there do exist lists of all bullion bars. Each bar has a number, a mark of purity and a seal.AdvocatusDiabolihttps://www.blogger.com/profile/05290930478826481037noreply@blogger.comtag:blogger.com,1999:blog-4490468598422095060.post-86782664963966574212012-03-10T00:31:36.046-08:002012-03-10T00:31:36.046-08:00Russel Napier, one of the kings of deflation, at F...Russel Napier, one of the kings of deflation, at <a href="http://www.financialsense.com/financial-sense-newshour/guest-expert/2012/03/09/russell-napier/when-credit-dies-european-liquidity-situation-getting-worse" rel="nofollow">Financial Sense</a><br /><br />VictorAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-4490468598422095060.post-37785784755803545802012-03-09T23:35:39.881-08:002012-03-09T23:35:39.881-08:00DTCC says gross exposure on CDS on Greek gov bonds...<a href="http://www.dtcc.com/" rel="nofollow">DTCC</a> says gross exposure on CDS on Greek gov bonds is $69bn, net $3.2bn (theoretically, there could be more out there, but if the majority of CDS on Greece were written after 2008, they will know).<br /><br />Don't know what JS is trying to tell us.<br /><br />VictorAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-4490468598422095060.post-30429344691858070302012-03-09T23:25:43.561-08:002012-03-09T23:25:43.561-08:00AN,
I was referring to the CDS written on Lehman ...AN,<br /><br />I was referring to the CDS written on Lehman bonds. They were eventually settled quietly without any problems.<br /><br />Lehman itself went bankrupt because they had kept the 'super-seniour' part of their mortgage CDOs on their own balance sheet - that's a different story.<br /><br />IMHO, JS misses the point with the CDS on Greek government bonds. There is no further Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4490468598422095060.post-61720567742930722112012-03-09T22:58:46.065-08:002012-03-09T22:58:46.065-08:00Also of note, the CDS weren't written against ...Also of note, the CDS weren't written against Lehman, LEH was an issuer and conduit. <br /><br />What JS was saying is that, like a gargantuan fed backstop, if the contracts are called to perform you have hard cash standing in the place of an entity that can no longer deliver real production at the level which flows to the bondholders. Donuts.Aiionwatha's Nationhttps://www.blogger.com/profile/17333816591160312091noreply@blogger.comtag:blogger.com,1999:blog-4490468598422095060.post-2577183320159214662012-03-09T22:40:38.094-08:002012-03-09T22:40:38.094-08:00Big day
http://www.youtube.com/watch?v=UD9ue1Itby...Big day<br /><br />http://www.youtube.com/watch?v=UD9ue1Itby8&feature=relatedAiionwatha's Nationhttps://www.blogger.com/profile/17333816591160312091noreply@blogger.comtag:blogger.com,1999:blog-4490468598422095060.post-83879389590454782762012-03-09T20:43:24.287-08:002012-03-09T20:43:24.287-08:00Geoff,
I will be deleting Panama as a possible &q...Geoff,<br /><br />I will be deleting Panama as a possible "go to retire spot" thanks for the info ;)Wendyhttps://www.blogger.com/profile/17448815628676884529noreply@blogger.comtag:blogger.com,1999:blog-4490468598422095060.post-1960987231372350302012-03-09T20:42:56.986-08:002012-03-09T20:42:56.986-08:00Wendy,
it is the CDS that is marked to market. Th...Wendy,<br /><br />it is the CDS that is marked to market. This means when the market price of the CDS goes up (because people think the default becomes more likely), the issuer of the CDS already transfers cash to the holder.<br /><br />So the CDS is dangerous when the market prices change rapidly because the CDS issuers suddenly need to come up with the cash.<br /><br />When the CDS are finally Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4490468598422095060.post-35415790172772547352012-03-09T20:31:20.742-08:002012-03-09T20:31:20.742-08:00Thanks Victor,
I remember your previous comment r...Thanks Victor,<br /><br />I remember your previous comment regarding marked to market. I understand the theory of marked to market vs marked to fantasy.<br /><br />This alphabet soup of derivatives is confusing. I do understand that one can buy a greek bond, and then buy a cds to insure against the failure of the bond to perform. I don't understand why these bonds might be marked to marketWendyhttps://www.blogger.com/profile/17448815628676884529noreply@blogger.comtag:blogger.com,1999:blog-4490468598422095060.post-62992882089065513842012-03-09T20:08:23.463-08:002012-03-09T20:08:23.463-08:00Wendy,
as I said, I don't think so. I am not ...Wendy,<br /><br />as I said, I don't think so. I am not sure Jim Sinclair has all the details about the CDS. As far as I know (although I am not an expert on this either), many of these are marked-to-market. So whenever their market price changes, one party has to transfer cash to the other.<br /><br />When the CDS finally settle, this just makes the profit/loss official, but the cash has Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4490468598422095060.post-51848439164968316502012-03-09T19:21:09.629-08:002012-03-09T19:21:09.629-08:00Has anyone read Jim Sinclair's comments about ...Has anyone read Jim Sinclair's comments about Greece's "credit event"?<br /><br />"Clearly, the amount of CDS’s outstanding is infinitely more than the $3.5 billion that is being quoted.”<br /> <br />Jim Sinclair continues:<br /> <br />“The BIS confirms, in the area of CDS’s the total outstanding is approximately $37 trillion. So I believe the reports being given about Wendyhttps://www.blogger.com/profile/17448815628676884529noreply@blogger.comtag:blogger.com,1999:blog-4490468598422095060.post-81368615654021606792012-03-09T16:15:06.167-08:002012-03-09T16:15:06.167-08:00Concerning the CDS payout because of Greece, it is...Concerning the CDS payout because of Greece, it is difficult to guess how big this issue will be. As far as I remember, many (all?) of them are marked-to-market, i.e. they are dangerous if their market price changes quickly and the issuer suddenly needs to post more collateral. When they are finally closed or paid out, the cash is already there, it is just that that is the time when the profit isAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-4490468598422095060.post-41837248115398045902012-03-09T15:56:25.561-08:002012-03-09T15:56:25.561-08:00@JR
From hundreds of comments ago, on China infla...@JR<br /><br />From hundreds of comments ago, on China inflation, if I have time, I'll follow up. <br /><br />Your quotes about sale of debt reducing base money/inflation possibility were on point as usual - 100% agreed. I just have some further possibilities I'd like to put out. <br /><br />We'll see how much time I get, and thanks for yours.Aquilushttps://www.blogger.com/profile/15750465782608134458noreply@blogger.comtag:blogger.com,1999:blog-4490468598422095060.post-11139403656060707812012-03-09T15:52:47.568-08:002012-03-09T15:52:47.568-08:00ISDA auction rules and games for the curious:
1. ...ISDA auction rules and games for the curious:<br /><br />1. <a href="http://www.newyorkfed.org/research/staff_reports/sr372.pdf" rel="nofollow"> Federal Reserve Bank of New York Staff Reports - Credit Default Swap Auctions</a><br /><br />2. <a href="http://zerohedge.blogspot.com/2009/01/isda-cds-cash-settlement-auction-is.html" rel="nofollow">ZH 2009 - The ISDA CDS Settlement Auction is A Hidden Aquilushttps://www.blogger.com/profile/15750465782608134458noreply@blogger.comtag:blogger.com,1999:blog-4490468598422095060.post-63088563314741577472012-03-09T15:35:36.743-08:002012-03-09T15:35:36.743-08:00Ahem. I managed to munge the link I posted earlier...Ahem. I managed to munge the link I posted earlier (by stupidly not including the http:// prefix) to <a href="http://bit.ly/A9FGM9" rel="nofollow">the ISDA announcement</a>. Ooops. :-)<br /><br />Sure you all found it for yourselves by now anyway.DPhttps://www.blogger.com/profile/01965423353442076871noreply@blogger.com