- The International Swaps and Derivatives Association (ISDA) just announced the results of its 2H06 survey and, as I expected, Credit Default Swap (CDS) notional amounts outstanding at the end of 2006 reached $34.5 trillion, up 102% in just one year. I hasten to add that just six years ago there were only $631 billion outstanding. It is now easier, cheaper and more "efficient" to trade and hold CDS than bonds. Talk about the tail wagging the dog... Interestingly, some regulated exchanges (eg EUREX) have tried to get into the game by introducing listed CDS contracts, but the big boys like JP Morgan, Goldman, Morgan Stanley and Deutsche are snubbing them, big time. Why spoil their OTC fun and games? Pay close attention to this, because the ability to ultra-influence debt markets has far-reaching consequences for every soul on the planet. (For example: who is calling the shots? The ECB, Fed and BOJ and associated politicians, or the above four institutions that control 90% of the CDS market?)
- Based on a reader's comment to yesterday's post, I have looked a bit deeper into the US construction jobs data.
Between the end of 2000 and 2006, there were a total of 3.37 million new private jobs created. Out of those, 900 thousand or 27% came in construction alone.
But it gets even more interesting if we add another two directly related job categories: Real Estate and Architectural Services. Combined with Construction, the three sectors created a total of 1.26 million jobs between 2000 and 2006, or an eye-popping 38% of all new jobs. And this is before we take into account all the other affected sectors: mortgage finance and servicing, legal, insurance plus the furniture and homeware retailers.