Waiting for the big Kahuna Message Board

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Strategies & Market Trends : Waiting for the big Kahuna

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To: dybdahl who wrote (82329)	10/22/2008 11:57:19 AM
From: Real Man	Read Replies (3) of 94695

No, not the economy, but the derivative chain reaction happens just like that. The Fed is at the end of the chain, holding the mess together. The economy was a credit bubble economy held by always appreciating assets and borrowing against these assets. Derivatives contributed to transfer of risk to the system - in the end, the Fed. How this process is starting to reverse, kind of. The chain reaction started in subprime credit derivatives, spread to CDS, spread to currencies, stock market derivatives, and swaps. Fed needs to inject more and more credit. Granted, if they print trillions, they might succeed.

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