The difficult part is not understanding what credit default swaps are, but figuring out how to *value* them.
This involves complex math which can only be done via computer simulations and numerical-analysis calculations ... and experts don't really agree on the right assumptions to make in doing these simulations/calculations So, part of the reason the banks can't unload these financial instruments right now is that no one can really agree on what they're worth ... because the current world financial situation lies outside the scope of assumptions that have generally been made when doing the relevant valuation calculations. The financial world has not yet gone through the process of agreeing on how to value these financial instruments in a global economic regime like this one ... and going through this process will take at least months ... and in that time a real crisis could erupt ... so the US gov't may simply buy the financial instruments at a best-guess price and hope for the best ;-p ben On Tue, Sep 23, 2008 at 11:30 PM, Mike Tintner <[EMAIL PROTECTED]>wrote: > Ben, > > Are CDS significantly complicated then - as an awful lot of professional, > highly intelligent people are claiming? > > So can *you* understand credit default swaps? > Yes I can, having a PhD in math and having studied a moderate amount of > mathematical finance ... > > ------------------------------ > *agi* | Archives <https://www.listbox.com/member/archive/303/=now> > <https://www.listbox.com/member/archive/rss/303/> | > Modify<https://www.listbox.com/member/?&;>Your Subscription > <http://www.listbox.com> > -- Ben Goertzel, PhD CEO, Novamente LLC and Biomind LLC Director of Research, SIAI [EMAIL PROTECTED] "Nothing will ever be attempted if all possible objections must be first overcome " - Dr Samuel Johnson ------------------------------------------- agi Archives: https://www.listbox.com/member/archive/303/=now RSS Feed: https://www.listbox.com/member/archive/rss/303/ Modify Your Subscription: https://www.listbox.com/member/?member_id=8660244&id_secret=114414975-3c8e69 Powered by Listbox: http://www.listbox.com
