Lehman's Bomb Disposed?

Here is a link to the latest news re the Lehman's CDS close today. Perhaps after all there is to be no explosion? I did see this as well today though.

If tomorrow, when the dollar amounts are announced by the various parties involved, reveal no major losses (a small Hedgie should not be too much to worry about if it comes to it!), then this is a great crisis passed.

CDS may yet come to haunt the world at a later date if other big institutions go down, but for the moment this might be another sign that the credit crisis is past its worst point. LIBOR is coming down, money markets are opening up...what was that phrase? 'The green shoots of recovery.'

Now only a serious recession to get through and years of paying back the debt from the bail-out. In my wildest imagination I wonder if the scale of the bail-out would still be needed if less heed was paid to CDS rates. Traders looking at these were one of the main causes of the huge share price falls.

However, now the socialists have their hands on the throat of capitalism, they are not about to let go...

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.

A week is a long time in global economics

Who would have predicted?

- Brown to buy ALL our banks

- The Dow to be below 900 and sinking fast enough to take General Motors down (they need to turn huge loans, not likely to get them....).

- Iceland to go bankrupt and screw our local councils, then we declare economic war by using terrorist legislation against them (oh, but there is NO law of unintended consequnces...)

- A global 0.5% rate cut to have no bounce effect on the markets.

- Gold to be nearly unchanged.

Phew, much more too. Next week should be fun. Today we get the results of the Lehmans CDS shake-out, who will get caught when the music stops?