time to back up the truck, page-10

finicky I dont like any of them yet. Of course they all have different risk profiles, CBA for instance ducked the level of CDS exposure that ANZ had but walked into a cloths line with ABC Learning. The fact that ABS Learning could borrow a 1/2 Billion with so many related party transactions going on within ABC doest say much of the CBA credit team

Stay away from them all and wait for the value ahead IMO

There are about a dozen bad scenarios to playout, Bonza just metioned one fo the top ones IMO and thats Freddie and Fannie but there are heaps of others Lehman, Goldman, Merrill, Citi, AIG.... any of these could set off a domino meltdown that takes the others with it

not to mention GM, Ford and Chrysler

or the almost certain loss of America, Delta or one of the others

Credit Default Swaps are easy to understand, the a debt default insurance, the sell of the insurance offer to pay the debt if the debt holder defaults, if I say lend you $10m and you agree to pay me over 5 years, I then go to a third party and buy insurance that you will pay as agreed, I pay them a one off premium and a yearly amount for the insurance, currently if you want to insure say General Motors debt it will cost $8.2 million over 5 years, in other words there is an 82% chance to GM defaulting

In the context of ANZ hold billions of debt in the form of bonds, these bonds are made up of high risk debt from over 800 different companies, the idea of these bonds is that they are so blended that even though they junk by themselves the act of the blending them together makes them investment grade, ANZ bought insurance on these bonds in case of default to be doubly sure, the problem that ANZ faces is the issuers of this insurance are heading toward insolvency, if the these monoline insurers do become insolvent (remember the monolines are also guaranteeing many of the companies that are in trouble), then ANZ would have to immediately make provision for billions and billions of new debt

IMO the risk is that these monolines could hit the wall in a very short time frame if things get worse, if this happens ANZ shareholders will act like people in a theater thats just caught fire, everyone could run for the exists at once.

IMO if your sitting with some cash at that moment it might be a very good time to buy

Loading up the truck now pre supposes that these events will not come to pass

you can find CDS exposure on any of the annual financial reports usually at the end of the report