09-08-2008, 04:24 PM
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Del Mar
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Join Date: Jun 2006
Location: Washington dc
Posts: 5,277
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Quote:
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Originally Posted by philcski
Logically, that would make sense. In truth it didn't happen- Treasury spreads actually went DOWN today despite the US Government theoretically becoming more "risky". ABX (an index which tracks MBS pools) AAA tranches only improved by a half a point, so about 5bps a year, and are still trading in the mid 40's dollar price.
Meanwhile, FRE and FNM stock plunged to 1/8th of their previous value, wiping out the remaining $10 billion of market cap- hitting the fine citizens of the United States directly in their 401k and mutual fund plans (which pretty much every "conservative" fund owned). Additionally, all CDS contracts written on FRE and FNM triggered a credit event with close to 100% recovery, which in simple math means if you bet one way or another and were RIGHT, you lost all the present value of that contract, so all of Wall Street took major hits today.
But they're coming to save us!!!
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Why do you think this happened? |