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Credit Default Swaps Back in the News
Back in early 2007 I wrote about the risks in the market for credit default swaps, a type of financial instrument that basically serves as insurance against bond default. The crux of the article was that some of the insurers in question might not be able to pay when the time came, and that would be trouble.
Almost exactly a year later, in January of this year, I wrote that the Fed's bailout of investment bank Bear Stearns may have been intended to prevent exactly that type of situation (though I noted that I'd expected the trouble to come from hedge funds, not from full-fledged investment banks).
Today, the bankruptcy of investment bank Lehman Brothers may have set some CDS market problems into motion. As this Bloomberg article dryly notes:
Bond-default risk soared worldwide as the collapse of Lehman Brothers Holdings Inc. sparked concern that the $62 trillion credit-derivatives market will unravel.
It turns out that Lehman was one of the ten largest "counterparties" (credit insurers) in the default swap market, so their failure is obviously a big deal.
On the other hand, things probably won't be allowed to get too bad before the next bailout is put into place.
-- RICH TOSCANO
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A day after ditching the local newspaper, the metro columnist joins Mayor Jerry Sanders' team.
Tuesday, September 16 -- 3:16 pm
Auditor puts the redevelopment authority in context.
Tuesday, September 16 -- 12:45 pm
City residents have conserved a small percentage of their water. Not enough, Sanders says.
Tuesday, September 16 -- 12:02 pm
SURVIVAL IN SAN DIEGO
State utility tentatively grants North County's request not to lose its area code.
Tuesday, September 16 -- 4:25 pm
LETTERS TO THE EDITOR
Two of these things are not like the other.
Tuesday, September 16 -- 1:29 pm
CAFÉ SAN DIEGO
Prop S will cast its heaviest financial burdens on those least-equipped to deal with it -- young first-time homebuyers.
Thursday, September 4 -- 1:28 pm
COMMENTARY: SLOP
David Copley is having a yard sale and we're all going to pay for it.
Monday, September 15 -- 6:11 pm
COMMENTARY: RICH TOSCANO
Apparently insurance company AIG is an even bigger threat to the CDS market than Lehman.
Tuesday, September 16 -- 8:34 am
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This Just In
EPA refuses the territory the same sewage-treatment waiver it gave San Diego. » Jan. 8 -- 8:34 am
City Attorney's Office is tight-lipped, but mayor's rep says liability could drop.
Jan. 7 -- 7:06 pm
How in the world did the real estate market free a Cunningham briber?
Jan. 7 -- 3:55 pm
SURVIVAL IN SAN DIEGO
A peek inside the under-construction Vantage Pointe.
Jan. 7 -- 2:58 pm
LETTERS TO THE EDITOR
Help readers get to know the new City Council president on a more personal level.
Jan. 7 -- 1:46 pm
CAFÉ SAN DIEGO
Here's a look at the tangible results MPAs have yielded.
Jan. 6 -- 4:30 pm
COMMENTARY: SLOP
Convicts find freedom, the former city manager of Chula Vista heads to Iraq, and more tidbits.
Jan. 6 -- 7:22 pm
COMMENTARY: RICH TOSCANO
The median-based price indicators closed out a dismal 2008 with another monthly decline.
Jan. 6 -- 4:06 pm
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Copyright © 2008 voiceofsandiego.org. All Rights Reserved.
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