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Politics : Dutch Central Bank Sale Announcement Imminent? -- Ignore unavailable to you. Want to Upgrade?

To: GUSTAVE JAEGER who wrote (22705)	3/19/2005 11:15:34 AM
From: The Vet	Respond to of 80991

Speaking of numbers, I see GM has a market cap of $16 million and liabilities of $300 million... So, according to your statements " The US is still a wealthy borrower " taken with your statistic that the majority of these corporate bonds are not held by foreigners, then it seems that it is the US financial system that is going to suffer the bulk of the loss. Fannie Mae also seems to be a few billion short, and again it seems the US lenders are stuck with the bulk of that too.. A billion here, a billion there, it may not take to long before that wealthy borrower comes under pressure, as the rest of the world starts to see the cracks in the system widening. Derivatives are being used to paper over those cracks, and that hides them for a while, but all derivatives really do is to transfer and disguise the risk. It is never eliminated. If any one of the multiple major counterparties fail the "insurance" provided by derivative positions could unravel at a dramatic pace. The practice of "netting out" huge opposing but interrelated contracts to provide an acceptable balance sheet looks fine providing all of the contracts can be settled with all of the different parties at the right time and without default or delay. Even a temporary situation that delays a single contract being completed could unbalance the whole system in a serious of cascading defaults. Creditworthiness is as much a factor of perception as it is of reality. Trust lost is difficult to regain except at a huge cost.