All You Ever Wanted To Know About The Current Sovereign CDS Market But Were Afraid To Ask: The CDS-Bond Basis, CDS Curve Flattening, Volatility Skews And More

Tyler Durden's picture

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naufalsanaullah's picture

cds 101... zh really is expanding its horizons... i'll get started on the "intro to vix" .ppt slide

Anonymous's picture

math is how we got ourselves into this mess. just take a quant with a criminal mind and they will find a way to rattle out free money by gaming the system by skimming off basis points on billions.

and that's why banks like cds. it's only math with rounding in their favor.

didn't they do this in Superman 3?

ZeroPower's picture

Office Space style. Well said.

VegasBD's picture

Hackers was a pre office space post superman 3 skimming scheme.

dark pools of soros's picture

if Pryor just drove the minivan to work and left the sports car at home...

Anonymous's picture

Giant Douche - Turd Sandwich. which one fits you best.

Anonymous's picture

Math is kind of here to stay my friend. Best to get a handle on it as well as you can. If you bloat yourself up to 400 lbs. and then break your hip falling down the stairs, saying "gravity is what got us into this mess" isn't exactly productive. Properly regulated CDS is nothing more than insurance which isn't all that new of a development.

phaesed's picture

errrr, not all keynesians.... the majority.... don't throw post-keynesians in with the lot

Anonymous's picture

Difficulty in getting paid if sovereign of your type actually does default?
n.a. (a.k.a. Fed QEs u out)

Difficulty in spotting intentional mispricing of sovereign risk (relative over the NOT so sovereign basket case) for someone’s own naked purp, creating fake DXY rallies (not unknown to tank the PoG, mind you) while front running your client, whose currency happens to represent a larger part of that basket and whom, incidentally, you yourself advice / fee charge @ the same time in hiding all those sausages away?
n.a. / we are EFFICIENT due to huuuuge LIQUIDITY! (a.k.a. fuck the IMF & their sovereign default order & what the hell did you mean by inside info & manipulation?)

Easibility of naked shorting / no underlying position ?
HELL YES! (become the last fool to this sell side avalanche / khm scheme / unless your personal BoA consultant finds one more - for u to unload to).

Anonymous's picture

amen, bruddah.

no one seems to know who writes most of these pieces of shit, and everyone seems to think the market is bottomless by virtue of its apparent liquidity.

how is that whole ung thing working out? is short analysis really necessary when looking at equities? is 8bln euro really that big a short position?

oh, but these are cds. written on the bond market where investors are obviously much smarter than equity or commodity investor/traders. nothing wrong here, nothing that could possibly be similar to other markets that have risen and fallen under their own weight.

god bless spain for chasing this shit down. unfortunately, i suspect when they stop pulling this string they will find a village idiot and not some nefarious bond vigilante.

dark pools of soros's picture

how many credits did I earn reading this??  will ZH offer a course on Penco Tech?

Fritz's picture

I fully expect the Squid to launch a Sovereign CDS ETF...What good is a financial instrument if they can't somehow fleece the unsuspecting public?

shinola's picture

Really dumb questions...


Why are naked CDS allowed to exist?


Who would  buy CDS (insurance) from a counterparty who has no reserve requirement?


Something stinks.





Anonymous's picture

"There seem to be few “invincible” countries left in the world. The market puts a 4% likelihood of a US default and that ranks the seventh safest in the world. Things go downhill from there with the next level being China matching UK, both at 7% chance of default."

China mor risky than US. Say wha?

Dirtt's picture

The parents come home from a 20 year-abroad vacation on BabyBoom Island drinking denial by the barrel and look what Johnnie has been doing to our house.

Budd Fox's picture

Well said....CDS is a Weapon of Mass Destruction.

Think about allowing me and other 50 guys in the neighborhood to take a fire insurance on your home...knowing you smoke in bed.

How many insurance companies will still be alive?????

VegasBD's picture

Thank you for this one guys!!!

artcash's picture
artcash (not verified) Feb 14, 2010 9:09 PM

this guy is an idiot:

Unscarred's picture

Desperation is a stinky cologne.

pros's picture

This article is about 100 different ways to make commissions.....

a load of BS, essentially..

keep it simple...

what is going to happen to the Euro is the question..

get that right, you win...

if you get diverted into high commisssion trades you will get fleeced, as usual...

that's our job!


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