What about getting CDS protection from a 400 bp marked-to-market counterparty? The US treasury defaulting on it’s debt would be a major debacle, but not unthinkable. Just to put it in perspective - nobody I can think of is planning on increasing sales next year except the US Treasury. In 2009, the Treasury needs to sell more than $2T in debt up from a previous max of $550B. And there is still the issue of what to do with the GSE’s. I’m not buying UST CDS, but I can see why someone might.
westbruin Wrote: ------------------------------------------------------- > convert, sorry for not giving you specific credit > on the broker insuring government (for > example)… and obviously that’s why AIG was so > popular for issuing CDS. > > i feel somewhat stupid asking but are CDS > generally marked to market with payments made > when limits are reached. or is that one of the > biggest reasons why we’re in this mess?? i.e. > people just assumed AIG, citigroup etc. were good > for the issuance?? I’ll bet all UST CDS are marked to market.
JoeyDVivre Wrote: ------------------------------------------------------- > > > I’ll bet all UST CDS are marked to market. i’m not accounting expert, but if AIG sold UST insurance and classified as ‘hold to maturity’ rather then a trading security, they would not have to mark to market would they?
I mean marked to market in the credit sense, not the accounting sense.