Tuesday, 14 October 2008
Lehman's CDS settlement: Viva the markets!
Guido is linking to an announcement that the net position on Lehman's might only be $6 billion. Perhaps the CDS market is efficient after all and all the fears about trillion $ losses are just hokum.
That would be nice. Does not really explain the huge margin calls being made on Hedge funds though. The problem with this net figure then is that it does not disclose individual positions. Perhaps one bank has made $200 billion and another lost $194 billion?
The final announcement is on 21st October; Plenty of volatility until then.
If there is little exposure, then rather belatedly, it shows we can let banks fail if they are bad. Just as we have bailed out all of ours.....timing is everything.