Thursday is “D-Day” . . . . . as in Derivatives
by admin on October 7, 2008
Payouts could bring down the entire derivatives house of cards; including many big banks
This Thursday, derivatives of Lehman Brothers get settled. With the huge default that took place when Lehman filed Bankruptcy, credit default swaps are going to have to pay out billions.
Analysts are saying that the credit default swap folks will have to pay out at least 15 to 20 cents on the dollar for Lehman’s bad debt. In reality, they could have to pay much more. These payouts could bring down the entire derivatives house of cards; including many big banks.
In anticipation of this problem, the fed has doubled the amount it lends overnight to banks. They doubled it last week, so they know a real problem is coming and they’re trying to smooth it out.
Whether things fall apart this Thursday or Friday remains to be seen but it doesn’t look good. Hold on to your hats, folks, it’s going to be a wild ride.
Related posts:
- Coming Soon: The 600 Trillion Derivatives Emergency Meeting
- The Next Derivatives Bloodbath: Insurance and Auto Makers
- Carbon Derivatives same scheme as the Credit Default Swaps causing the current crisis
- $1 Quadrillion of Unregulated Debt At Core of Coming Derivatives Crisis
- It’s the Derivatives, stupid! Why Fannie, Freddie and AIG all had to be bailed out
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