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Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: stan_hughes who wrote (702)	8/7/2007 7:16:42 PM
From: Box-By-The-Riviera™	Read Replies (1) \| Respond to of 71454

don't tell anyone, but i'll be on at 5pm cst tomorrow.

To: stan_hughes who wrote (702)	8/8/2007 6:29:44 AM
From: Real Man	Respond to of 71454

Yeah, Ben da man. Currency stuff of course is valued according to the same ole Black-Scholes with beta and a "smile". So, I would assume, the banks might have "risk-free" Gaussian positions paying some interest. So, a sign of trouble appears when liquidity is low and currency volativity is on the rise. So? If volativity appears somewhere, then it spreads to other markets through "correlations", and then computers in all markets fight the emergent volativity by a mean reversal, and then the mean reversal spreads back to the original market. Voila - you have a very stable pyramid of derivatives with respect to minor shocks, while a major shock will topple them all. Gulp! I bet nobody is able to say anything about the threshold. -ggg- That explains carry trade and stock market simultaneous troubles. The system is very stable to shocks, but it can go nuclear some day. -ggg-