EP
<Panics happen when cash flow can no longer support leveraged assets>
Panics can also be triggered by unexpected events, such as natural disasters. This time, the US has no room to wriggle, borrow, claw its way out of a big problem. The hurricanes in Florida stressed the system pretty good, I remember. A bit more of that, and it would be all over.
In a stronger economy, you could ride out an 'event' like that, but when you're riding on a knife's edge, something like that requiring immediate liquidity, may be just the thing. After the Northridge quake in CA the state floated reconstruction bonds pretty quickly but the market is so stressed now, an event a little larger in scale might not be so easy this time.
While it is easy to plot lines on a graph and see where they're headed to formulate you're own strategy, reality, like life, doesn't always work out that way.
David |
