By the best estimates of the International Swaps and Derivatives Association and the Bank for International Settlements (BIS), often referred to as the central banks’ central bank, the notional value of credit default swaps is some $62 trillion, or 35 trillion British Pounds at an exchange rate of $1.78.It share price

A credit default swap (CDS) is akin to an insurance policy. It’s a financial derivative that a debt holder can use to hedge against the default by a debtor corporation of sovereign. But a CDS can also be used to speculate.

I think the Bear deal showed us that the Fed won’t let a lack of authority or expertise stand in the way of their of bailing out a big financial company.

By popular request:

http://www.youtube.com/watch?v=2WbOUwbwr2w

“I think… like, South Africa…

sometimes… because… they don’t have maps, … and… because…”

Yes, will the US even bother to monetize? It should have some class and spare us the embarassment.

How much gold does Saudi Arabia have?

I never really liked them.

Missiles are highly inflationary by design.

“Im a hockey mom and like to bake”

“As this process plays out and the Federal government is continually forced to expand its balance sheet as an offset to the leverage contraction occurring largely throughout the remainder of the economy and domestic financial markets ahead, THE big question becomes, where will the funding for this balance sheet expansion come from and what will it ultimately cost? A question near and dear to the hearts of US taxpayers everywhere, to say nothing of the investment community. This, we believe, is now and will continue to become one of the most important questions for our investment activities. We cannot take our eye off of this ball as we move ahead. Point blank, and we could not be more serious when we ask this, will the US face a funding problem at some point?”

So it all comes down to Eric Dinallo again, the NY State Insurance commissioner. We are hampered by the ouster of former New York governor Elliot Spitzer, who played a crucial role smashing cretin skulls together during the intermediate phases of the monoline crisis. Dinallo is far less effective without Spitzer in the room. In comparing Dinallo v. Spitzer, think of Bernanke vs. Volcker, but Dinallo is less intelligent than Bernanke. Not good.

The LACK of federal regulation by institutions posing GLOBAL systemic risks is precisely what the Fed has been SCREAMING about for so long. To deaf ears I might add. Corrigan was complaining about this very thing back in 1985 when he was head of the NY Fed. But nobody would listen to us.

Now, 22 years later, we will ALL pay the price.

The Federal Reserve has been thwarted by the stranglehold, in this PARTICULAR instance, that the insurance companies have on this nation.

And Congressmen from BOTH parties have long enjoyed the fabulous parties hosted by insurance company lobbyists teeming with hordes of gorgeous women so fabulously interested, for no apparent reason, in making the Congressmen and their aides extremely comfortable. This failure of Congress is an important subtext to the story.

AIG, and the insurance industry that is essentially unregulated, has been a hotbed of free market jihadi “innovation”. And AIG is INDEED the gunpowder factory.

Yves, our faithful moderator and guide for this historic journey has described this story as a “slow motion” one.

AIG’s stock was down approximately 30% on Friday and I believe was THE most actively traded stock on the NYSE.

I would therefore use a different adjective other than “slow motion” to describe that. But I am thankful that she brings it front and center for our undivided attention.

We are indeed falling off a cliff in slow motion. But the ground is now in sight.

Inflation bugs, fasten your seat belts!

Matt Dubuque

One expert was recently asked to compare our market conditions to a baseball game. If so, what inning were we? His reply: We are just finishing the national anthem.

BTW, I like Ano’s idea above. So, Ms. Palin what are your views on the AIG doctrine?