Question: How is it possible for "every major currency" be taken down at the same time?
It's not so much the currency, but the country's asset base, both equity and debt.
With CDS the incentive is to destroy any remaining value in the underlying asset so the speculators can collect on the insurance (the CDS).
Again, the example is having all of your neighbors taking insurance policies out on your house and then endeavoring to burn it down to collect.
If a country's assets are slowly (or quickly) being destroyed in such a manner, how can they fend off such attacks except by devaluing their currency or, as in the case of Europe, setting up emergency funds to defend their member's sovereign debt and hold the CDS speculators at bay?
CDS contracts would be fine between issuers and buyers of debt, parties with INSURABLE INTERESTS in that underlying asset. But when you have every Tom, Dick, and Harry Hedge fund betting (and praying) for a meltdown of an asset, or it's issuer, it forces capital to be diverted from productive purposes.
This is also what I foresee with Cap & Trade and Carbon Credits.
After all, they were created by the VERY SAME person, Blythe Masters.
Hawk |
