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Politics : Formerly About Advanced Micro Devices
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To: TimF who wrote (427522)10/17/2008 4:29:51 PM
From: Road Walker  Read Replies (2) of 1570631
 
None of which means that the way they where used, and the aftermath of that are not very big problems. But the nominal dollar total makes it looks much worse than it is.

First, that's the value of the derivative, the potential value of the derivatives (if things break really bad) is much higher (I've read, don't ask me where). Second, a lot depends on the ability to pay of the issuer of the derivative... and with $60 Trillion, or even say 20% of that at stake, there is no way that the institutions that issued this garbage are going to be able to pay, which threatens both sides of the trade. Third, a steep recession is most likely in the cards, which intensifies the problems.

It's true that nobody knows the extent of the problem... but i wouldn't take it lightly, not even close.
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