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Old 01-08-2013, 08:25 AM   #1
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Lightbulb USA CDS (credit default swap) watch

The debt ceiling mania 2.0 is coming up in late February/early March.
US CDS (credit default swap: http://www.investopedia.com/terms/c/...#axzz2HOQyvzVv ) quotes have recently been rising a bit, but nothing special so far. This could change in the future, especially when budget deficits get even more extreme either due to irresponsible fiscal policies (very likely) or due to rising interest rates (probably not arround the corner) or due to a currency crisis (unpredictable).

Anyway, here is the current data, I'm gonna update the thread should things change drastically. CDS quotes can be obtained from Bloomberg under the ticker CT786896:IND

Quote :
TODAY

High40.64
Time01/07

52 WEEK SUMMARY

High49.72
Low28.87
Return-18.86%

http://mobile.bloomberg.com/quote/CT786896:IND

Sorry for the crappy chart.

Bloomberg has removed the USA CDS quote from the free desktop version of bloomberg.com . It's now only available to paying users. They forgot to remove the free quote on bloomberg mobile however
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Old 01-08-2013, 08:34 AM   #2
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So it looks like this was a bad play for anyone who payed for protection on our debt. I never really understood where the money to pay on a default would come from, since the amount of debt is so huge.
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Old 01-08-2013, 11:00 AM   #3
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Originally Posted by swissaustrian View Post:
...
Bloomberg has removed the USA CDS quote from the free desktop version of bloomberg.com . It's now only available to paying users. They forgot to remove the free quote on bloomberg mobile however
I know some peeps on another forum that have Bloomberg terminals who would likely be amenable to providing some chart pr0n on this (once in a while at least) should the need arise.
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Old 01-09-2013, 01:55 PM   #4
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I would advise against trading CDS entirely. I am VERY pissed off because two rather large funds in Fort Worth, TX ended up going naked on CDS and blew up their funds because they NEVER paid out. Why they thought the ISDA would declare a credit event knowing fully well the writers of the CDS (AIG for example) didn't have enough capital to cover those contracts is beyond me.

Want to know why gold stocks were weak into year end for the past 2 years? It was entirely because these global macro funds that were taking on governments by buying CDS contracts. The 1st time they paid out, they got lucky because governments had no clue what was going on. Post AIG bailout, it was suicide. One fund I know of ended up down 80% over 4 years because they bought so much of that junk. AIG should be thanking them for being such suckers.

So please.. understand what you are buying here. You are buying insurance with a counter party that is likely highly corrupt. Stick with gold and silver.
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Old 01-09-2013, 01:59 PM   #5
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Very well said DSA, very well said. Still, you've 'gotta admire a good ponzie fleecing. These guys are supposed to know what the hell they are buying with their clients money, but apparently self importance and hubris keep getting in the way.
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Old 01-09-2013, 02:07 PM   #6
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Originally Posted by ancona View Post:
Very well said DSA, very well said. Still, you've 'gotta admire a good ponzie fleecing. These guys are supposed to know what the hell they are buying with their clients money, but apparently self importance and hubris keep getting in the way.
Exactly. What's more disturbing about this is they still don't see where they went wrong. 800 hedgefunds went down and easily 1/4 of them were involved in CDS based on what i'm hearing. I'm not talking out of my a$$ either.
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