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Archive for October, 2008
Financial Crisis 101: Why CDS could never work
Many still call or describe CDS (Credit Default Swaps) as a kind of insurance policy against credit risk to limit the risk of the lender. Well that might be so in their dreams or it has been used as a camouflage by the bankers to persuade the investors of the quality – or to mislead them on the lack of it – and suggest that there would be an underlying asset.
And that’s were all the problems start. To issue or construct a CDS there was never a requirement to actually being linked to, i.e. having provided or taken out the credit or having an contractual agreement with these two parties.
Everybody could issue CDS completely unregulated and unlimited. This is of course the reason for the incredible amounts being pushed around and it also provides the reason that – in rare cases CDS might have been an insurance against credit defaults – but in general these papers were only betting slips if certain events might occur most similar to betting on horses or dogs races.
If these instruments would have only been allowed to use for …
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Short Film: Mankind Is No Island
This film by Jason van Genderen was entirely shot on a cell phone on the streets of NY and Sydney. It won this year’s Tropfest NY short film festival in September…
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Humor: Music videos about the Financial crisis
Four music videos on the banking crisis based on some all time classics – from Elton John’s Candles in the Wind / Bankers in the Wind to Billy Joel’s We Didn’t Start the Fire / Wall Street Meltdown
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Humor: John Cleese on Sarah Palin
British comedian and former Monty Python star shares his thoughts about vice presidential nominee, Sarah Palin…
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Animation: Bana Panic
Just in time a greatly done animation on the panic of the “Jonses
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GM: A look into the abyss
Today was a bad day at stock exchanges all around the world and it was potentially the worst day in stock market history for General Motors.
Already down about 80% from its trading range around USD 40 per share 12 months ago, the share price of the Detroit car maker today was shredded another 30% to around USD 4.7. The report from JD Powers published today that is expecting an “outright collapse” for the global auto industry in 2009 certainly did not help. And for that the writing was already on the wall when GM stopped production in some of its factories in Europe earlier this week (Today even BMW has announces a short production stop with one of his factories in the next weeks).
Let’s put these figures into perspective:
The last time GM was traded around USD 4.7 a share was in the 1950s when an average car sold for …
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