The Epic American Credit and Bond Bubble Laboratory Message Board

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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: bart13 who wrote (79914)	3/12/2007 5:47:08 PM
From: Real Man	Read Replies (2) of 110194

The origin of the large drop? As many puts are shorted with low volativity by about 300 billion leveraged hedge fund money, who simply follow LTCM-like strategy of delta-hedging, in the event of a sharp drop, computer models require hedging by selling futures. No, "they" will never let it drop, or take it down, because they will go down with the ship. It's just subprime that is a total disaster now, and it's tied to a lot of credit derivatives. I guess that gets some folks a little nervous. Who will be the first rat running to the exit? The subprime is a very serious issue, especially if it spreads, which it's doing now. All that loan portfolios on which credit derivatives pyramid is resting is rapidly defaulting. That's life, and credit bubble popping (hear the sound?), not the Fed. I think the Fed may be a bit concerned about the dollar. They may run out of options soon.

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