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Strategies & Market Trends : The coming US dollar crisis
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To: Tommaso who wrote (7488)5/20/2008 5:25:54 AM
From: Real Man  Read Replies (3) of 71475
 
I believe the financial system WAS at stake, since a failure
of BEAR as a counterparty would have created an instant
systemic gap loss of 400-500 billion. The Fed didn't bail out
Bear as a financial firm, they bailed out Bear as a
counterparty, thus pouring gasoline on Derivative Ponzi scheme
(in addition to their soup of facilities, which accomplished the same
thing). The Ponzi scheme then promptly recovered (VIX),
and that accounts for this stock market rally which denies
reality.

The problem is that the derivative bomb is indeed a Ponzi
scheme. If it can't run higher, it has to collapse. The Fed
thus enhanced the inevitable collapse by postponing it, the
same thing they've been so good at for the past 10 years.
Needless to say, the bomb (really the OTC derivatives Ponzi
scheme) is already so huge that the
failure of 1 firm would have caused a collapse of entire
US financial system through domino effect.
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