Living Reflections from a Dream

There is another article in the NYT today on the dreaded Credit Default Swaps I wrote about here, here, and here:

Credit default swaps form a large but obscure market that will be put to its first big test as a looming economic downturn strains companies’ finances. Like a homeowner’s policy that insures against a flood or fire, these instruments are intended to cover losses to banks and bondholders when companies fail to pay their debts.

The market for these securities is enormous. Since 2000, it has ballooned from $900 billion to more than $45.5 trillion — roughly twice the size of the entire United States stock market.

No one knows how troubled the credit swaps market is, because, like the now-distressed market for subprime mortgage securities, it is unregulated. But because swaps have proliferated so rapidly, experts say that a hiccup in this market could set off a chain reaction of losses at financial institutions, making it even harder for borrowers to get loans that grease economic activity.

It is entirely possible that this market can withstand a big jump in corporate defaults, if it comes. But an inkling of trouble emerged in a recent report from the Office of the Comptroller of the Currency, a federal banking regulator. It warned that a significant increase in trading in swaps during the third quarter of last year “put a strain on processing systems” used by banks to handle these trades and make sure they match up.

....

There is no exchange where these insurance contracts trade, and their prices are not reported to the public. Because of this, institutions typically value them based on computer models rather than prices set by the market.

Neither are the participants overseen by regulators verifying that the parties to the transactions can meet their obligations.

The potential for problems in sizing up the financial health of buyers of these securities leads to questions about how these insurance contracts are being valued on banks’ books. A bank that has bought protection to cover its corporate bond exposure thinks it is hedged and therefore does not write off paper losses it may incur on those bond holdings. If the party who sold the insurance cannot pay on its claim in the event of a default, however, the bank’s losses would have to be reflected on its books.

So I was in NY today - where the money is, or was, anyway: lower Manhattan, Wall St. Walking by the NYSE, you could almost trip over the news people trying to interview the regular folk on how they were reacting to the stock market hijinx of late (as if it's news to get someone to say they are a bit scared so they are going more conservative in their investments and buckling down). Also, it's quite the random sampling: people walking around on the street outside the stock market.

But what really amused me about the days visit to the big apple was that Giants fans think they are going to win the Super Bowl. OH, how I laughed. Note to Tom Brady: stop clubbing with Gisele and start prepping!

I love this!

A couple of days ago, actually last week (time flies) I wrote about the Black Donnelly's on this blog. Since then I have received a couple of emails from what I assume is a marketing intern for a some sort of NBC company. He tells me the following:

Hello Amy,

I noticed that you discussed the new crime drama The Black Donnellys on your blog.

I wanted to let you know some exciting news. In addition to the 13 episodes that NBC has ordered for The Black Donnellys, there is a special online episode going live ONLY on NBC.com next week after the second episode airs this coming Monday night.

So why is it ONLY available online? Well, let's just say that it is a full-length episode and has some really intense footage that pushes the envelope. Expect to see things beyond what you're used to getting from network TV- this is footage that was just too edgy to be aired!

This is more of a heads-up now as the episode isn’t live yet. If you don’t mind, I’ll shoot you a quick email to the link as soon as it’s up and running. Once it’s up, it’ll only be available online for a few days, so make sure to catch it before it’s gone.

Keep in mind that those viewers who don’t go online won’t miss anything having to do with the overall plot – so if you miss it, you won’t be out of the loop for the March 13 episode. But wouldn’t you like to see why NBC isn’t airing it on TV?

And of course, you can catch the second episode on TV this coming Monday, March 5, where you can get your fix of fast-paced action, edge of your seat drama, and great music sequences of the pilot and that you can expect from the rest of the shows. You can view the preview of next week’s episode at: http://www.nbc.com/The_Black_Donnellys/preview/?__source=BLG|1.

Please feel free to call or email me with any follow up questions.

Thanks,

Amie

Amie Kershbaum

360i

On Behalf of NBC

akershbaum@360i.com

Do I want to watch scenes "too edgy for tv"? Yes, I do. Do I pause and wonder if something considered too edgy for NBC, may never even be considered for HBO because it would be too boring? Yes. But it's an excellent way of drawing in the young hipsters. If only I could download it to my iPod.