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原帖由 public59 於 2008-9-25 12:09 發表


Currently, a lot of people in US are agruing if "fair value accounting" is leading to the financial/credit crisis. FASB are now forced to speed up its response time in dealing with credit crisis-r ...

It's not entirely the new accounting system, it's also the responsibility of the credit rating agency.
In the past, the credit rating agency has been blamed for giving too much slack to some corporations.
And so to do things in the safe side, they suddenly tighten all ratings.....and this immediately blow AIG away.

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原帖由 Rainybreeze 於 2008-9-24 16:15 發表
PROs?  I can't speak on Rubber's behalf, but for Rainybreeze?  Please, as I was saying, don't blow it out of proportion.

For the CDS, the US rumor goes that they are going to put the tradings onto  ...

Globalization - a fancy word it is. Indeed.... a fancy word it is.

In communist china, it's the word they use to represent "advancement to market economy".
In the capitalist's eyes, this is the equivalence of "lower production cost" and cheap labor.
In western liberals' eyes, this is the representation of pure corporate evil squeezing the poor.

Whether China will continue it's open policy I do not know, but in this fincncial tsunami, I am quite sure more regulations will be called for. And this will happen in all major financial centers around the world.

The golden era of a free economy with little or no intervention as we know may be coming to the end.  

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原帖由 public59 於 2008-9-25 12:09 發表


Currently, a lot of people in US are agruing if "fair value accounting" is leading to the financial/credit crisis. FASB are now forced to speed up its response time in dealing with credit crisis-r ...

At present, the US has not yet adopted the IFRS which is being commonly used in EU.  I think it is not practical to use fair value for structured investments. They are too complicated and difficult to evalute.

This is the best explaination I read so far why AIG and Bear Stearns are bailed out due to the CDS market.

There is an estimated 516 trillion $ derivatives compare with 100 trillion $ stock market ( and 15 trillion $ US$ money supply ).  The bomb is too big to let it blow..

What is happening in both the stock and credit markets is a direct result of what's playing out in the CDS market. The Fed could not let Bear Stearns enter bankruptcy because – and only because – the trillions of dollars of credit default swaps on its books would be wiped out. All the banks and institutions that had insurance written by Bear would not be able to say that they were insured or hedged anymore and they would have to write-down billions and billions of dollars in losses that they've been carrying at higher values because they could say that they were insured for those losses.
The counter party risk that all Bear's trading partners were exposed to was so far and wide, and so deep, that if Bear was to enter bankruptcy it would take years to sort out the risk and losses. That was an untenable option. The Fed had to bail out Bear Stearns.

Make no mistake about it, there's nothing wrong with AIG's insurance subsidiaries – absolutely nothing. In fact, the Fed just made the best trade in its history by bailing AIG out and getting equity, warrants and charging the insurance giant seven points over the benchmark London Interbank Offered Rate (LIBOR) on that $85 billion loan!
What happened to AIG is simple: AIG got greedy. AIG, as of June 30,had written $441 billion worth of swaps on corporate bonds, and worse,mortgage-backed securities. As the value of these insured-referenced entities fell, AIG had massive write-downs and additionally had to post more collateral. And when its ratings were downgraded on Monday evening, the company had to post even more collateral, which it didn't have.
In short, what happened in one small AIG corporate subsidiary blew apart the largest insurance company in the world.
But there's more – a lot more. These instruments are causing many of the massive write-downs at banks, investment banks and insurance companies. Knowing what all this means for hedge funds, the credit markets and the stock market is the key to understanding where this might end and how.

[ 本帖最後由 Rubber 於 2008-9-25 16:49 編輯 ]

Blown out of proportion......

Regulation itself is not that difficult.  The question is who would be benefit form the regulation?  Yes, it's a wealth distribution decision.

We want to spend a dollar, we either earn a dollar, or we go out and borrow a dollar, then we have something to spend.

Under the yet to be regulated US free market, this is how Greenspan been keeping US out of recession out of the past 20 years.

Another thing is, under the said system, you could self multiply your money, in FM's case, from core asset of 80 billion to 5200 billion.  It's done legitimately, so that if other people don't play the same game, they are going to be at the wrong end of the stick when counting the dollar bills.  Anything for sales?  Someone has a lot of other people's money to buy.

Look at Hong Kong Exchange, the at-auction and at-auction limit orders, the warrants.  The Board of directors is doing their part to make HKE as much a "Free Market" as the US to attract Funds to come in.  If we want Hong Kong to be the Asia lively Financial Center, something has to give.  

Gamble big and win big.  Loser?  Well, something has to give.

Well, from small investors' point of view, it may take too LITTLE (from the Big Gamblers) but give up too MUCH (of thier own protection).

There is a good explanation about the meltdown of CDO due to the sub-prime mortgage of the US housing.

normaSubprimehttp://online.wsj.com/public/resources/documents/info-flash07.html?project=normaSubprime0712&h=530&w=980&hasAd=1&settings=normaSubprime0712

The Credit Crunch turning all investors in CDOs big losers.

Regulation - yes...   I always wonder why people are allowed to short-sell before actual borrow from someone to sell.
This remotely applies to those as in CDO or CDS..
How can you have no " interest / stake " and insure or as an insurer against someone's default ?
Those derivative product should be regulated when there are some real money are in stakes ( you cannot throw in collateral ).  Those collateral was seen to multiply itself.

This Credit Crunch has opened the door of the unthinkable....

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原帖由 COO 於 2008-9-25 17:06 發表
Blown out of proportion......

Confidence is hard to retain!