Derivatives to be Manufactured in China

The latest to be stamped, “Made in China,” will be CDS. Not to worry because, “It is neither evil nor good.”

Hey, I didn’t just make that up! Here’s the story with a link:

China to Introduce Credit-Default Swaps by Year-End

By Christine Richard

Sept. 13 (Bloomberg) — China will introduce credit-default swaps by the end of this year, according to Shi Wenchao, secretary general of the state-backed National Association of Financial Market Institutional Investors.

Investors in the derivatives will be required to own the underlying risk, Shi said today in an interview with reporters in New York. China plans to limit the amount of leverage used in the contracts to avoid the kind of financial crisis faced in the U.S. two years ago, he said.

“We believe CDS is a neutral risk-management tool,” Shi said. “It is neither evil nor good.”

Private swaps complicated efforts to solve the credit crisis in the U.S. when regulators and market users couldn’t easily determine how interconnected banks had become through trading contracts.

China also expects to open its debt markets further to foreign companies, saying the prospects for their selling debt will gradually improve during the next 3 to 10 years to “extraordinarily great” from “promising,” Shi said.

NAFMII was formed by the People’s Bank of China, the country’s central bank, in 2007 to help develop over-the-counter financial markets, including bonds, loans, commercial paper, foreign-exchange and gold.

Wow. Another 12 year old does interviews?

Nothing like the smell of some bubblicious Red CDS in the new year! I’d say that prospects of credit bubbles look “extraordinarily greeeaaat!” Obviously an effort to keep their new found never ending growth never ending, the communists are learning quickly from their oligarchic “free market” Ponzi central banking counterparts. I hear that the fireworks will be amazing this New Year!

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About Nathan A. Martin 121 Articles

Nathan A. Martin is President of Wingman Investments, LLC, and author of the book Flight to Financial Freedom – Fasten Your Finances. He sees people, both young and old, facing a new era where they are forced to be responsible for their own financial success or failure. His message is clear; become financially literate or be a victim of the external forces that are impacting everyone. Nathan possesses an undergraduate degree in Professional Aviation and Business as well as a Master’s degree in Aviation Management and Operations.

A former Air Force and retired airline pilot, his flying took him the world over participating in many operations including the invasion of Panama, and combat time during Operation Desert Storm. Experience has come over 26 years of flight - logging more than 12,000 flight hours both civilian and military, and as the owner of a corporate aviation management company whose focus was aircraft efficiency.

Influenced by his parents entrepreneurial activities, Nathan began his business and investment training early in life and has used that knowledge every step along the way... from business school to his own corporations and personal investments.

Visit: Nathan's Economic Edge

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