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CDSs posts

Bernanke: Market for securities backed by commercial mortgages 'completely shut down'

Posted Jul 23rd 2009 1:40PM by Connie Madon (RSS feed)
Filed under: Bad News, Economic Data, Federal Reserve, Financial Crisis

Listen up! Listen up to what Fed Chairman Bernanke has to say about commercial real estate. He said that the market for securities backed by commercial mortgages had "completely shut down." This is a serious if not devastating statement. Can we infer that the market for credit default swaps (CDSs) has shut down? If so we are at the brink of a new financial situation.

Mr Bernanke also stated that continued deterioration in commercial property with defaults rising sharply would present a "difficult" challenge for the economy. Prices for commercial real estate have fallen 35% since the market's peak.

Continue reading Bernanke: Market for securities backed by commercial mortgages 'completely shut down'

Peterson drafts legislation to end speculation in derivatives

Posted Feb 3rd 2009 6:00PM by Connie Madon (RSS feed)
Filed under: International Markets, Good news, Market Matters, Financial Crisis

Originally a CDS (credit default swap) was a protection against the default of an underlying bond, usually a mortgage. It was a fine idea.

But now enter the speculators who developed a scheme to trade these CDS's independent of the underlying mortgage. This has developed into a $30,000 billion dollar trading market. It is this market that is destroying world economies like they are twigs snapped in the wind.

Continue reading Peterson drafts legislation to end speculation in derivatives