Canada, eh? The meltdown is global. Yes, I am very concerned.
The Fed is extremely scared. What are they so scared of? I
think we know. 50% of the Fed balance sheet is lent out, up
from about 10% this January. Fed balance sheet is not enough
to forestall trillions of real losses from the housing
meltdown.
All stocks are not without risk, including gold stocks. Safety
first. Physical gold and silver is my main holding, by far.
I have been accumulating SOME SA gold stocks from ZERO. Some
risk, so what? They are very cheap at POG=900.
I am concerned that derivatives will inevitably cause a domino
effect once one big player or many small players (hedge funds)
blow up and default on their contracts. The effect on
derivatives from many smaller players blowing up will be the
same as from large player blowing up, just more gradual. -g-
The end of this type seems inevitable, because derivatives
have been growing exponentially, and these markets can't grow
to infinity. 11 Trillion REAL VALUE (500 Trillion notional,
but who cares about that) is completely INSANE. Offloading
risk onto the system under assumption that the Fed will
always save it? Yeah! Systemic risk is enormous. The Fed
will soon be out of ammo.
What happens then?
1) A meltdown
2) Monetization on a grand scale, leading to hyperinflation.
Can they monetize out of derivatives? NO. Why not? Cause
derivatives either have to grow exponentially much faster
than new money is created or collapse. This is a Ponzi scheme.
3) both?
I pick (3), although the degree, the relative weight of
(1) and (2) depends on what the
Fed and others will do. If Bear almost toppled the system,
this is NOT a joke. Here is TED spread. While the spread
has come down since mid - March, it reached the levels
higher than in 1987 market crash 3 times. It is turning
up again.
bloomberg.com |
