WaMu sub debt

As regular readers know I now am the proud owner of a (scary) position in WaMu subordinated debt. The reasons were explained here.

It is clear that the market disagrees with me. Here is a chart of the credit default swap. Its right up in Ford Motor territory...

I have had one reader disagreeing with my analysis and suggesting that WaMu losses could be $60 billion. They have not explained their estimate - so it doesn't help me much. The market is inherently estimating that 60 billion is possible.

60B strikes me as inherently implausible - but this blog exists so that the diaspora can point out my mistakes. I like being told why I am wrong.

So please - suggestions and quantifications devoutly desired.

Minor update and correction: The Series K is floating rate - but the floating rate is based on the $25 base. The series K is trading at a very small proportion of face. My calculations as to running yield are slightly (but only slightly) wrong. Thanks to a reader for this correction. I also own the series R which is a 7.75% fixed and I confused the coupons. I was more interested in the K (which is cheaper) essentially betting on solvency rather than current coupons... The R is convertible - but I am not that much interested in the conversion. Par is all I hope for...