Thursday, November 6, 2008

Icelandic CDS Freezer Burn

As some of you may know, Iceland declared bankruptcy about 2 months ago and they had a few banks that had to go through the credit default swap (CDS) auction to determine the amount that protection sellers had to pay for these banks' debt. We haven't heard anything regarding the results, but the below link revealed the results from the CDS auction.

As you will read, the freezer burn from this auction was pretty bad for the protection sellers. It turns out that those entities that sold protection will be on the hook to pay 93.375% of the senior. In comparison, when the CDS auction was performed on Fannie and Freddie debt, protection seller's only had to cover about 10 cents on the dollar. With these Icelandic banks, the protection seller is on the hook for almost 94 cents on the dollar. Ouch!!!!

The good news is that the amount of money that will switch hands for these Icelandic CDS bets is in the ball park of about $34.3 billion. Although this is a huge amount of money, it is really peanuts compared to the $400 billion that was involved in the Lehman CDS bets.


Unedited Censored SNL Bailout Skit

As the market tanks today, the Oracle thought that he would share a little humor to raise your spirits. The link below goes to a SNL video about the bailout bill that was censored from being broadcasted recently. It's entertaining and one of the SNL cast member really nails the Barney Frank's role.

Here is the video:

Wednesday, November 5, 2008

Meredith Whitney Updates the Financial Sector

For those that don't know who Meredith Whitney is, she is the executive director of equities research for Oppenheimer. She is one of the few people on Wall Street that provides a very good and raw opinion as to the health of the financial sector. Below is the CNBC video of her interview. Her opinions continue to be extremely bearish for the financial sector and all viewers of this video should pay close attention to her statements.

Saturday, November 1, 2008

A look at the credit crisis in the UK

As we have read on the news, the credit crunch is global and affecting countries all over the world. Here is a little news segment from BBC World showing how bad things have become in the UK. From what the Oracle has read, things in Eastern Europe are much dire than the UK. The Oracle believes that as the problems of Eastern Europe spreads, UK's situation will deteriorate even more.

Here is the BBC video. Unfortunately the people that put the video on Youtube did not allow for embedding. So here is the link.