Comments on: AIG – Taxpayer Nightmare http://mrmortgage.ml-implode.com/2008/11/10/aig-nightmare/ Your personal tour guide through the housing finance "misinformation maze". Thu, 14 May 2009 13:28:04 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: fedwatcher http://mrmortgage.ml-implode.com/2008/11/10/aig-nightmare/comment-page-1/#comment-8002 fedwatcher Wed, 12 Nov 2008 10:38:44 +0000 http://mrmortgage.ml-implode.com/?p=427#comment-8002 The simple solution is to declare all CDS contracts as betting slips and all the issuers as bookies and let the RICO prosecutions begin. The simple solution is to declare all CDS contracts as betting slips and all the issuers as bookies and let the RICO prosecutions begin.

]]> By: BertDilbert http://mrmortgage.ml-implode.com/2008/11/10/aig-nightmare/comment-page-1/#comment-7930 BertDilbert Tue, 11 Nov 2008 07:27:19 +0000 http://mrmortgage.ml-implode.com/?p=427#comment-7930 Mr. M Here are some of my notes from the BIS report on CDS derivatives for the period ending December 31 2007. Based on the last release date, the new report should be out mid to late November right after the G20 meet in Washington. ****************** There was an increase in CDS notational value from June 2007 to Dec 2007 of 26%. This growth rate if carried forward to June of 08 would give us a notational value of 71 trillion of CDS contracts. The huge jump however came in the fair value of contracts, in six months, jumping from 721 trillion to 2 trillion, for a gain of 177% Notational value increase in six months 26% Fair value increase in six months 177% ************************ The huge jump in fair value of contracts to two trillion, a 177% increase shows that the market was starting to crumble. I am curious as to how much of the 60-70 trillion notational value is with AIG. The AIG bailout is dwarfing the banks. I wonder how much of AIG CDS might be holding up bank balance sheets?? Such as you mentioned that Wells had not marked down its assets like some of the other banks. Buffet described these as toxic sewage though.... Might do some snooping to see what comes up. Mr. M

Here are some of my notes from the BIS report on CDS derivatives for the period ending December 31 2007. Based on the last release date, the new report should be out mid to late November right after the G20 meet in Washington.

******************
There was an increase in CDS notational value from June 2007 to Dec 2007 of 26%.

This growth rate if carried forward to June of 08 would give us a notational value of 71 trillion of CDS contracts.

The huge jump however came in the fair value of contracts, in six months, jumping from 721 trillion to 2 trillion, for a gain of 177%

Notational value increase in six months 26%
Fair value increase in six months 177%
************************

The huge jump in fair value of contracts to two trillion, a 177% increase shows that the market was starting to crumble. I am curious as to how much of the 60-70 trillion notational value is with AIG. The AIG bailout is dwarfing the banks. I wonder how much of AIG CDS might be holding up bank balance sheets?? Such as you mentioned that Wells had not marked down its assets like some of the other banks. Buffet described these as toxic sewage though….

Might do some snooping to see what comes up.

]]> By: Tom http://mrmortgage.ml-implode.com/2008/11/10/aig-nightmare/comment-page-1/#comment-7928 Tom Tue, 11 Nov 2008 06:06:46 +0000 http://mrmortgage.ml-implode.com/?p=427#comment-7928 ...even 1.5% 30-year fixed rate mortgages are not going to save the housing market. There aren't enough potential buyers with 20% down payments, job security, and the ability to move to make much of a dent in the current inventory. Wait until the Alt A mortgages recasts start to hit California and other bubble states....pure bloodshed. Interesting the SF Gate showed that 90% of Bay Area zip codes are down year over year ($ / sq ft). Some of the nicer areas are a full two years behind San Diego's crash, but they will crash nonetheless. We are headed back to historical norms for housing appreciation, i.e. just a tad over inflation, and no more. The Bay Area Kool-Aid crew is going to get a harsh lesson in mean reversion as this continues to play out (San Carlos, Cupertino, etc. -- I'm talking to you! ;-) Watch and see.... …even 1.5% 30-year fixed rate mortgages are not going to save the housing market. There aren’t enough potential buyers with 20% down payments, job security, and the ability to move to make much of a dent in the current inventory. Wait until the Alt A mortgages recasts start to hit California and other bubble states….pure bloodshed. Interesting the SF Gate showed that 90% of Bay Area zip codes are down year over year ($ / sq ft). Some of the nicer areas are a full two years behind San Diego’s crash, but they will crash nonetheless. We are headed back to historical norms for housing appreciation, i.e. just a tad over inflation, and no more. The Bay Area Kool-Aid crew is going to get a harsh lesson in mean reversion as this continues to play out (San Carlos, Cupertino, etc. — I’m talking to you! ;-) Watch and see….

]]> By: BertDilbert http://mrmortgage.ml-implode.com/2008/11/10/aig-nightmare/comment-page-1/#comment-7910 BertDilbert Mon, 10 Nov 2008 15:55:21 +0000 http://mrmortgage.ml-implode.com/?p=427#comment-7910 I question how any insurance company it to remain solvent when we are in the middle of an asset devaluation and insurance companies are supposed to be making payout out of asset pools. A commercial policy I have with AIG had a big jump in price citing higher industry losses. Maybe those were AIG losses they were talking about! I question how any insurance company it to remain solvent when we are in the middle of an asset devaluation and insurance companies are supposed to be making payout out of asset pools. A commercial policy I have with AIG had a big jump in price citing higher industry losses. Maybe those were AIG losses they were talking about!

]]> By: george http://mrmortgage.ml-implode.com/2008/11/10/aig-nightmare/comment-page-1/#comment-7908 george Mon, 10 Nov 2008 15:22:25 +0000 http://mrmortgage.ml-implode.com/?p=427#comment-7908 AFAIK AIG was a big net seller of CDS' ( Lehman etc. ) and now other parties are sucking gov money out via AIG. Housing collapse was just a begining... AFAIK AIG was a big net seller of CDS’ ( Lehman etc. ) and now other parties are sucking gov money out via AIG. Housing collapse was just a begining…

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