10/10/8
Elaine Meinel Supkis
The running story of today's economic news continues. I will comment on what this all means as I figure out the ramifications of all this mess. Many, many things are flowing out of this devolution of the entire G7 banking system. This is a monumental failure of the entire concept of Free Trade and the Floating Currency. Indeed, it is almost like a fairy tale: all the ill-gotten gains from manipulating things will vanish and everything set to rights again by the intervention of divine authorities.
HERE IS THE BIG STORY FOR TODAY: THE AUCTION OF $400 BILLION IN CREDIT DEFAULT SWAPS!
Lehman Bonds Given Initial Value of 9.75 Percent in CDS Auction
(Bloomberg) -- Credit-default swap dealers set an initial value of 9.75 cents on the dollar for Lehman Brothers Holdings Inc. bonds in what may be the biggest-ever payout in the $55 trillion market.
An auction held between dealers today is determining how much buyers of default protection can claim after New York-based Lehman filed for the largest bankruptcy with $128 billion in bonds outstanding.
Sellers would have to pay out the difference between the amount of debt protected by the derivatives and the bond value, meaning they'd have to pay out 90.25 cents on the dollar if the initial auction results held. A final price is scheduled to be announced at 2 p.m. in New York, according to Creditfixings.com, a Web site run by auction administrators Creditex Group Inc. and Markit Group Ltd.
A 90% DIFFERENTIAL! LOTS OF BANKRUPTCIES IN THE PIPELINE NOW AS ALL THE CD SWAPS ARE SWAMPED! THIS IS WHAT PAULSON NEEDED FOR THE $700 BILLION BAIL OUT FOR 'GOOD BANKS' AS WELL AS BAD BANKS! THEY ARE ALL MADE 'BAD' WITH THIS SWAP GOING DOWN.
Crisis mounting, G7 finance leaders gather for talks
(AFP) - Promising "we'll get through this," US President George W. Bush on Thursday scheduled weekend global economic crisis talks at the White House with finance ministers from major wealthy democracies.
He was also due to make a high-profile public statement on Friday to soothe upheaval on financial markets and reassure a fearful public after US stocks plummeted to new five-year lows Thursday in their seventh-straight loss.
The US president, due at political fundraisers in Florida and South Carolina, was first to make remarks in the White House Rose Garden around 10 am (1400 GMT) in a bid to shore up confidence in his administration's handling of the crisis, said spokeswoman Dana Perino.
Cost of U.S. Crisis Action Grows, Along With Debt
(Bloomberg) -- The global financial crisis is turning into a bigger drain on the U.S. federal budget than experts estimated two weeks ago, ballooning the deficit toward $2 trillion.
Bailouts of American International Group, Fannie Mae and Freddie Mac likely will be more expensive than expected. States are turning to Washington for fiscal help. The Federal Reserve said this week it will begin buying commercial paper, the short- term loans companies used to conduct day-to-day business, further increasing costs. And analysts now say the $700 billion bank- rescue plan passed by Congress last week may have to be significantly larger.
*snip*
That means a lot more borrowing by Treasury, which will push up interest rates, said Greenlaw. ``The Treasury's going to be ramping up supply dramatically over the course of coming months to meet this enormous federal budget obligation,'' Greenlaw told Bloomberg this week. ``The supply will trigger some elevation in yields.''
Treasuries have fallen the past four days even as stocks sank, a sign investors are preparing for bigger U.S. government borrowing. Benchmark 10-year note yields rose to 3.82 percent at 7:49 a.m. in New York, from a close of 3.45 percent Oct. 6.
Continued>>>
http://elainemeinelsupkis.typepad.com/money_matters/2008/10/the-october-fri.html
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