Yes, kind of like horse-traders A and B who serially sell the same horse to each other except each sale is for $25 more. They are both happy and both are making money very nicely until the horse dies and so does the trade. In that case, the debts and promises A and B made to banks, etc., while the trading was good cannot be paid and they both blow up.
The folks who guaranteed A's and B's debts blow up, too, because the trade seemed so good and so steady that they took their own silly positions based on what A and B were doing. But those folks are also guaranteed by someone else who decided to get a piece of the action, and so forth, with multiple guarantors until the chain of guarantees ends. Blow ups go up and down the line until the total losses are enormous. Chaos hits all markets.
In the meantime, other guarantors who relied on Horse Traders C and D who were trading on another horse, which was also sure to die someday, get very nervous as they see the problems that can arise when horses die. Credit freezes up. Nobody guarantees anything anymore.
In the meantime, a rare disease hits all horses and they start to croak left and right. It HTF for everyone involved, esp. the newer players who got into the game when they saw the easy money everyone else was making. The horse trading market ends up in a huge pile of horse manure. Except in Europe, where there are no horses. vbg
All over horses everyone but everyone knew were going to die or get lame some day. |
