Word: worthing
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...plan to work, private investors and the government will have to agree what these loans are worth. "Many of the institutions that bought these deals didn't understand them fully," says Barry Silbert, chief executive of SecondMarket, which helps investors buy and sell hard to trade assets. "It is going to be very hard for the government to come in and try to pack up these opaque assets and ship them off to investors." (See the top 10 financial collapses...
...other bonds get paid back. As a writer, or seller, of CDS contracts, Strata investors get a regular fee, much like a annual amount any insurance holder would pay, for guaranteeing the buyer of the insurance against losses on the bonds. All told, Bank of America wrote CDS contracts worth $20 million based on the debts of as many as 75 companies. Add the fees from the insurance contracts to the interest Strata was already receiving on its collateral and voila you get an annual yield for the bond of 4.93%, or more than double the actual bonds Strata held...
...what is Strata worth today? Certainly not the original $20 million it's investors paid for it. According to research firm Markit, the average CDO tied to mortgage bonds lost half its value last year. CDOs based on corporate bonds have performed better. However, Strata sold insurance against high-yield corporate bonds, and those will be the first corporate debts to go bad if the economy gets worse. Indeed, one of the companies in Strata's bond pool, Hawaii Telcom Communications, recently filed for bankruptcy. In mid-January, Moody's put Strata on its list of bonds it was thinking...
...true, but the swoon has caused additional problems as it traps many flailing borrowers in their homes. Simply selling your home when you can no longer afford it is often not an option at a time when some 18% of mortgage holders owe more than their house is worth...
...More than $330 million worth of Chinese toys are imported by India annually, which accounts for over 60% of the total sold by Indian retailers. D.S. Rawat, secretary-general of the Associated Chambers of Commerce and Industry, says the ban is necessary not for safety reasons, but to guard against Chinese toymakers flooding the market with its products. "We have already been warning the government against dumping by China, Indonesia, Malaysia and Thailand," he says...