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Tag Archive: Credit default swap


First time I heard about paraprosdokians, I liked them. Paraprosdokians are figures of speech in which the latter part of a sentence or phrase is surprising or unexpected and is frequently humorous. (Winston Churchill loved them).

  1. Where there’s a will, I want to be in it
  2. The last thing I want to do is hurt you … but it’s still on my list.

  3. Since light travels faster than sound, some people appear bright until you hear them speak.

  4. If I agreed with you, we’d both be wrong.

  5. We never really grow up — we only learn how to act in public.

  6. War does not determine who is right, only who is left.

  7. Knowledge is knowing a tomato is a fruit. Wisdom is not putting it in a fruit salad.

  8. To steal ideas from one person is plagiarism. To steal from many is research. Continue reading

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How MF GLOBAL Failed

Not many people know about the convictions behind how MF global failed. This is how the destruction process works @ Wall Street and MF Global bankruptcy was one of the example of it.

They were very bad in Europe; leveraged 33:1 so there is no space of error when the firm is leveraged like that.

The three lessons that are can be shared from MF Global’s death:

  • Accounting loopholes have to be closed and oversight improved.
  • Non-bank financial firms should have a lead regulator.
  •  Rule-writers should consider “non-systemic” firms as well as “too big    to fail” banks.

But there is a contrast view to it:

More regulation, more rules, Dodd Frank/EMIR/FATCA  and to no purpose at all.

A banker wants to bet his firm on the direction of sovereign debt. If successful, we call him Soros and pat in him on the back. And if not, the firm is closed down. Regulations were pointless, because no rule book can reign in human ingenuity. Continue reading

Who could have seen this coming? Has Argentina turned defaulting into an art-form ?blog

So the Argentina’s second default this century is finally done. Referring to Bloomberg, by defaulting today, Argentina may trigger bondholders claims of as much as $29 billion — equal to all its foreign-currency reserves. Just remember that the last 2 days have seen ‘smart money’ buy Argentine bonds and stocks to all-time record highs.

Some more information from Bloomberg :

If the overdue interest on Argentina’s dollar-denominated securities due 2033 isn’t paid by July 30, provisions in bond indentures known as cross-default clauses would allow the nation’s other debt holders to also demand their money back immediately. The amount corresponds to Argentina’s debt issued in foreign currencies and governed by international laws. Continue reading

The Famous Rogue Traders

Recently attended a town-hall on the operational risk, the topics shared by the host was not new but it was all about awareness in blogthe organisation. Lot of people asked why rogue traders still exist. But, that seems as if it’s an easy one to answer. Fool-proof risk management doesn’t exist and never will. At, least it won’t while the rogue traders are being covered by rogue managers.

You see, the definitions at the beginning had one thing wrong. They are definitions of solitary, lone-wolves. But, even lone-wolves belong to a group. They just prefer to avoid the assistance of others in certain matters. The rogue trader’s pack is the howling, fierce management for which he works. Lone-wolves always have alpha members they take orders from, don’t they? Lone-wolves are sometimes excluded from the pack to protect that alpha-male, thus preventing ‘in-breeding’ in the pack. It’s exactly the same in the trading world of finance. Continue reading

Not many of you aware of the incident that took place in the month of April 2012 Bloomberg and Wall street journal made the headlines 813530JPMorgan Trader’s Positions Said to Distort Credit Indexes and ‘London Whale’ Rattles Debt Market.

Picking up from the CDX.NA.IG indices are composed of 125 North American corporate credits that are investment grade when the index begins trading understanding JP Morgan loss.Taking a position in the index allows traders to hedge or speculate. Going long means selling protection on the index in the expectation that the underlying company credits improve or at least do not default. Going short means buying protection on the index. The net notional value of the CDX.NA.IG.9 has surged from about $90bn at the start of the year to $150bn in April – indicating a big jump in trading. Continue reading

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