Credit Default Swaps

$128 billion in Lehman Brothers credit default swaps will get their final price today. According to Bloomberg, the initial price on the bonds was 9.75 cents or 25% lower than the lowest estimate. $115 billion in CDS payments will have to be made. When Lehman went bankrupt, CDS were selling for 5% +790 bips per year. Buyers will be jumping for joy - if their counterparty can pay up. I wonder how the hundreds if not thousands of CDO's that sold CDS are holding up right now.

And now for some good news: Oil under $80! Time to buy that gas guzzler you always wanted!