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

To: stan_hughes who wrote (87469)	10/9/2007 2:59:02 PM
From: benwood	Respond to of 110194

Thanks for your elaboration, re: the context of technological acceleration and possibly destructive positive feedback loops in our financial infrastructure. With the other systems I described, e.g. airplane, postal system, they are "tried and true." They aren't risk free -- I got somebody else's opera tickets the other day, for example -- but the risks are well understood. There won't be a day next year when suddenly all planes crash or all mail is misdelivered. I agree that the financial sphere risks today are not understood, because it's the behavior under duress which matters most ultimately and which for the most part has not been tested at all. The Fed has helped see to that, and as time progresses, these models are refined in a narrower and narrower manner in order to eke out that extra 1% skim, and like any control system, expanding the arena in which the system would be "out of control" and fail. With each bailout, confidence grows that a systemic meltdown will not occur within the "job time" of those creating the system. I think that's the critical piece of the puzzle -- employees at GS and JPM et al don't care if they are flying something akin to the Saturn V rocket -- they just want confidence they themselves will pull out their own millions before it fails. Greater reward now means less thought about how likely it is ultimately to fail and how disastrous those consequences could be. So yes, mistakes will be revealed, and they will be profound.

To: stan_hughes who wrote (87469)	10/9/2007 4:25:07 PM
From: ggersh	Read Replies (1) \| Respond to of 110194

Stan... well said!!!! Black boxes have yet to derive any problems that arise. Never in my trading experiences of 30 years (not all successful) have I seen markets rebound so quickly. You hear that Sub Prime will not top off til 2009 yet it was discounted in less a month. TY BEN.....