Institutional Investor Fear

By David Enke | August 12, 2008 | 8:12 PM | 1 Comment

As reported at the Financial Times, 60 percent of US and European institutional investors surveyed expect that another big financial firm will collapse within the next 6 months. Another 15 percent think it will happen in 6-12 months. Of interest is that 55 percent of those surveyed have also stopped using one or more financial institutions, other than Bear Stearns, as a counterparty on credit trades due to concerns regarding solvency. This has caused many to cut back their use of credit default swaps and other credit derivatives. US firms in particular were most worried, with 85 percent stating counterparty risk as a serious threat. It appears that many market participants are waiting for another shoe to drop, and at least one more washout and possible testing of the lows before the markets move higher.

bullbeartrader.com

we already know counter we already know counter party risk is a problem so this is old news. feels backwards-looking. all the super-leveraged hedge funds that were created to write counter-party risk with no thought they'd ever have to provide it have already blown up. credit derivatives brokers are already starting to starve. this isn't forward looking, this is a news report, sorry. Submitted by Anonymous (not verified) on Tue, 2008/08/12 - 9:13pm » reply |