I only want a one night stand

Chatting with some traders today, everyone sees counterparty risk looming everywhere as limits are being cut. No one seems immune from rumour - even WestLB!

People are also unwilling to lend long prefering overnight or thereabouts given the uncertainty and rate volatility. "Nope, just one night and we'll talk tomorrow!"

Some institutions I know are chuffed with themselves having bought credit protection on CDOs before markets turned - the price for such protection having shot up with increased fears of payouts. Prior to their recent use of derivatives they would have missed out on such profits.

The wheels are beginning to slow down in the markets

posted by John Wilson @ 6:20 PM Permanent Link newsvine reddit


At 10:29 AM, Blogger Hawkeye said...

It's fascinating how the herd instinct permeates a group of people who would pride themselves on their individuality. I would suggest that right now is the right time for an astute trader to make good and reasonable profits for his organisation by selectively bucking the trend you have identified. Essentially the principles of doing business have not changed. We should make the risk assessments in the way we always did, before the latest debacle, where because it was all new we decided the old rules did not apply. Having done that there must be some organisations out there who are worthy of a longer term relationship than the one night stand, at a decent price, of course!


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