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[vigilant]

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[tazmic]

The British Bankers’ Association, which represents high street banks, said that the move was anti-competitive...

Okay that's it, I don't understand any of this. I don't think I ever did.

[vigilant]

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[Foote Hertz]

Is it Howdy Doody time?

I'm not going to fully explain it, because it would start some conflict...

There you go again. Teasing. I appreciate all of the time and thought you've put into this, but now your hermeneutics of this crisis shell game is acting like a three card monte binge, and still I like it. I like it, and I'm born every minute.

Anyhoo, my response to the gubmit and the they, i.e. them, is: citizen's arayest! citizen's arayest! ... and also "Ooooh, I'm scared." (thanks Jeff)

on edit: this is my 77th lousy post

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[zhivkov]

vigilant-I was wondering if you had an overall feeling for the global economy in anywhere from now until three months from now. Do you think there will be an overall depression globally lasting for years? Do you think if there is a collapse it will be short term and a whole new monetary/fiscal policy put in place worldwide? Do you think there are some countries that will emerge from this meltdown, if it occurs, in a much better place? Sorry for so many questions and thanks for this thread.

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[zhivkov]

Thanks for looking at my questions vigilant. I think what you said in the first paragraph answers a lot. Much uncertainty and a lot of order out of chaos coming I think. What 'order' I really wish I knew. Thanks again and great thread.

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[anothershamus]

How does that song go? We've only just begun!

They want the money NOW so they can ask for LOTS MORE when the credit default settlement season arrives which is TODAY!

Read below and see what the other foot looks like from underneath!

And now for the complicated and scary stuff. Today is the beginning of "auction season", when the International Swaps and Derivatives Association starts a series of auctions to settle who pays what to whom on a plethora of credit derivative contracts relating to businesses that have gone into default.

It's settlement time on those humungous insurance policies for corporate debt, called credit default swaps, which I've mentioned to you as being another potentially lethal flaw in the financial economy.

Lehman Brothers building, New YorkIn the coming three weeks, payouts of hundreds of billions of dollars may be made - or at least demanded - to cover losses arising from the defaults on the debt of Fannie Mae, Freddie Mac, Lehman and Washington Mutual.

Sandy Chen, the analyst at Panmure who's been a smart predictor of credit-crunch accidents, estimates that payments on Lehman's battered bonds could be as much as $350bn.

Now the problem here is that for every beneficiary of these payments, there's an underwriter - those who provided the CDS insurance - which has to find the cash. And, as I've pointed out, this was a largely unregulated market, so the great fear in markets is that some underwriters have insufficient capital and will simply collapse when the claims are made.

That in turn would hurt financial institutions expecting to be paid out on their CDS contracts and damage others with separate exposure to the collapsed businesses. The shock to the system could be very severe.

To compound the current anxiety about all this, the CDS market is so opaque that it's impossible to know right now who is holding the radioactive baby.

This gigantic CDS mess has contributed to the seizing up of money markets in recent weeks, the tendency of all banks and financial institutions to hoard cash - because no-one knows who or what may be vulnerable during the CDS auction season.

That, as if you needed telling, is just one more reason why the US $700bn bank bail-out is no panacea, even if we should be relieved that it has passed its first Congressional hurdle.

The financial weather ahead remains stormy and unpredictable.