djAdvocate
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Joined: Jun 21, 2011 12:33:54 GMT -5
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Post by djAdvocate on Feb 4, 2012 17:33:16 GMT -5
I didn't say the instruments weren't real, I said the notional value is not. If you and I sign a forward agreement for some commodity valued at $500M, the notional value is $500M. But the value created is basically zero. agreed. it is really obvious that the underlying valuations are zero, but it is also a fact that the value invested is not. these losses are going to have to either be "marked to market" or written off- or more likely, just BURIED on the books for years. i can't seee how that is anything but bad.I did find plenty of sources that called MBSs "derivatives". I guess it depends on how you define the term. I don't think there were many MBS options, futures, forwards, and swaps. Perhaps I'm wrong, but even so, it would have amounted to a tiny % of the total derivates market. i think it is mostly credit/credit default swaps. but honestly? i have a hard time grasping what that term even MEANS.
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