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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Real Man who wrote (79933)	3/13/2007 1:39:36 AM
From: bart13	Read Replies (2) \| Respond to of 110194

When the lack of liquidity arrives due to mortgage defaults and related derivatives, the meltdown will likely be very brutal. Even though the Fed's response is predictable, that market is extremely large even for them to handle. From all the words around about derivatives, it seems they are much more on guard lately, but really what can they do with a lot of defaults in a multi-hundred-trillion dollar credit market that cascade through the system. Printing trillions will lead to hyperinflation. It sure could get very brutal and in my opinion there's almost a certainty of massive spikes in various assets like gold, but how far it goes is the major unknown. My sense is that this isn't the last train out before the final implosion... and I'm also not betting the farm on it. They do after all know at least as well as anyone how big the derivatives issues are as well as the amount of leverage around. I think that was a major reason why they and other central banks only jumped .25% each time. If the Fed and other CBs do allow more than one or two major dominoes to fall (that aren't picked up by the rest of the banking system) and do nothing, then you're likely right and I'll be putting a plan into effect... but I think they have enough power and control to head it off once more, and not only due to political pressure and effects. In other words, they don't need to handle the outstanding hundreds of trillions, just head off any cascade. It won't be a soft landing either, "they" need excuses to take action...

To: Real Man who wrote (79933)	3/13/2007 7:41:08 AM
From: Dan3	Respond to of 110194

Re: This Fed is definitely on guard against any liquidity problems, which I suspect is all they do, the manipulation is by the trade. If so, gaussian Black-Scholes type derivative models will continue to work and generate tons of money for Pigmen and the Riskloves who use them, and stocks will move higher for a little while longer. When the lack of liquidity arrives due to mortgage defaults and related derivatives, the meltdown will likely be very brutal Apparently Greenspan and Bernanke's real first names are actually Thelma and Louise - and they've never rushed towards a cliff they didn't like.... :-)