so what does the 1/2 point drop in rates mean?

[wa-loaf]

Credit Crisis Lexicon: http://www.cnbc.com/id/27085399

Handy

 

[Moe Ghoul]

Benny and the feds will feed the fire with a rate cut. LIBOR is a red flag, forced auctions of CDO's for LEH has spilled over to Europe. Ultra shorts are rockin. China is pumping 200 billion into the system, sounds like 700 billion to try and stem the tide was the quid pro quo for the 200 billion. Meanwhile the fed is pumping money out the discount window by the truckloads.

Lehman default swaps may recover 9.75 pct area
By Karen Brettell
Fri Oct 10, 2008 10:45am EDT

NEW YORK, Oct 10 (Reuters) - Banks, hedge funds and other sellers of protection on Lehman Brothers are facing losses in the area of 91.25 percent of the insurance they sold, based on the initial results of an auction on Friday to determine the value of the credit default swaps.

There are also substantially more sellers than buyers of the debt in the auction, indicating that the final price of the swaps may be even lower than the initial recovery levels of 9.75 percent, according to results published by auction administrators Creditex and Markit.

The net open interest to sell the debt is $4.92 billion, they said.

The credit markets are just a symptom of a much larger problem.