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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: John Vosilla who wrote (146926)9/16/2008 1:22:13 PM
From: butschi2Read Replies (2) of 306849
 
Today compared to 1989-93 is different, because interconnection in the financial system are far stronger and the system is now truly global and will affect all countries around the globe and we have financial WMDs now.

The WMDs didnt exist on this scale in the good old times and now the face value of derivatives is $600 trillion. Its the leverage based on leveraged assets that makes all very dangerous. OpEx will get very interesting for this month.

Nearly all asset classes had very wild swings in the last month:
Gold, Oil, Other Commodities, equities, bonds and currencies, coupled with spreads, volatility and TED-Spreads increasing on top of this come losses from LEH-CDS, AIG-CDS and outright losses from LEH hitting the wall.

This should kill many players on the wrong side. I expect more hedge fonds hitting the wall, especially in the oil pits. With a 30-40% + price decline in a few weeks some players on the wrong side should have gotten wiped out.

The bombs exploding arent solely asset write downs now but boosted by leverage through derivatives. AIG will go down through CDS not through asset write downs on conventional investments. Its the leverage that will kill them.

Therefore i dont believe in decoupling only in a furious recoupling and i expect some huge public infrastructure spending projects in the nex few years to come out of recession/depression.
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