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No doubt a great analyst but this is profiting from destruction and something i find very unethical. The whole CDS shebang should have been closed out in october 2008 when the systemic danger became apparent.
Personally i dont touch CDS. One can make plenty of money in the markets without dealing in toxic products.
I would suggest Rosenberg's talents would be better applied as a genuine ratings agency; doing the job Moody, S&P failed to do.
I was under the impression that Moody and S&P were quite successful at breeding any number of rats.
If I understood 10% of the above, I would invest in a noose and a tree limb.
Think of the fraud potential by individuals who structure LBOs using others money (poorly) and then have someone else take out CDS on said LBO.
I bet that has happened loads. It would be very difficult to prove the tip off from the guy inside the LBO.
I'm not sure the Prudential share raising to buy AIA is an LBO (perhaps someone can clarify) but if i did trade CDS i would take some out on that deal.
If China is in a huge bubble, then that deal has to be the worst since RBS et al bought ABN AMRO.
Things looking worse at the oil spill. Live BP feed here:
Some creative drunks on the LATOC forum are playing a drinking game where every time an eel swims into the view they drink. Doom=Fun.
They are not sure whether or not they can stop this thing at all now.
Hmmm...if you are on all sides of the potential deals...whats the greatness? Judge and jury is a position that should be banned.
Just to add, the majority of our bailouts have gone to cover CDS losses. If the public at large realised that they are having to face austerity measure because of this racket...well i can only imagine there will be folks swinging from lamposts.
and i consider myself a capitalist but this is just sick.
Equity players could structure a pair trade with options so that they're long vega, at least another KABOOM in the Vix would play to the bottom line then.
Financial engineering of the risk/reward on these deals aside, I found it interesting that 2 of the top 5 ideas are tied directly to advertising revenue. Also, these two companies deal with heavy competition in their respective fields. Isn't just the appearance on this list a nod to the BS/synthetically created recovery currently underway?
Granted that PE firms looking to create value from operating efficiencies has been a lie told repeatedly over the last decade, many believe that with a financing environment far different from the glory days of 07 they actually will have to start doing this. I would imagine this would be pretty difficult in the advertising/broadcasting space, especially as revenue declines into the worst economic slide since the Great Depression.
Is CDS really a better way to speculate on LBOs than equity? If you went long the equity calls in these names instead how would you have fared vs. playing CDS? Also, how liquid is the CDS market in these mid-cap companies? When your CDS position "pops" can you unload it at a profit just like that?
I wish I had started my evening reading with something less complex.
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