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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: William H Huebl who wrote (74521)	2/4/2007 8:24:49 AM
From: Real Man	Read Replies (1) \| Respond to of 94695

I don't think it's quite that. I think the derivative markets are so large, the Fed is very afraid of a meltdown. However, in the process of averting a meltdown they encourage more speculation with higher leverage. And, that's not just the Fed - it's all CBs around the World. The mess will have to get worked out on its own, which essentially means that when the BK comes, the Fed will be helpless. They have the power to prolong the boom, though. The markets do self correct sometimes. This time it may not be pretty - the size of the credit bubble is like nothing we have ever seen in history. Since the size of derivative markets has been huge for years, and nothing happened, people tend to ignore it. Not the Feds, though - they are very scared, and that is exactly what is keeping the BK at bay. The way the markets can price the Fed out is by devaluing the paper it issues - the dollar.