Why are Markets still Falling?
The Tsunami caused by Derivatives and Deleveraging
London, UK - 16th October 2008, 09:35 GMT
Dear ATCA Colleagues
[Please note that the views presented by individual contributors
are not necessarily representative of the views of ATCA, which is neutral.
ATCA conducts collective Socratic dialogue on global opportunities and threats.]
The invisible elephant in the room causing continuous falls in global financial
markets is the link to the privately traded Credit Default Swaps (CDS) and
the financial uncertainty they have created whilst synchronised deleveraging
takes place across the world. Many CDS contracts have been triggered at
their exorbitant notional or face value by a number of bankruptcies and
nationalisations and as a result many counterparties are unable to meet
their payment obligations which are becoming due week-in week-out in their
hundreds of billions of dollars. Much of what is driving the panic in the
financial markets is that so little is known about who owes what to whom
because of the lack of transparency and no central clearing house for privately
traded unregulated derivatives.
[CONTINUES]
[ATCA Membership]
We welcome your thoughts, observations and views. Thank you.
Best wishes
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