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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Pitera who wrote (9158)	3/23/2008 7:14:33 AM
From: stan_hughes	Read Replies (1) \| Respond to of 33421

It might temporarily "take the liquidity issue off the table", but it doesn't and can't address the matter of the insolvency of any one of a number of major financial institutions being exposed in the event of a large counterparty failure somewhere in the $500 trillion labyrinth of outstanding derivative agreements where some or all of these institutions are dependent upon the good performance of the link in the chain that fails That's what scared the crap out of everyone about Bear -- de facto counterparty failure, given that Bear was the 12th-largest actor in the derivatives play -- that, and the prospect of having the whole sordid mess on the front page in all its gory detail for the world to see if Bear went bankrupt under Delaware law and was therefore made subject to public and very close forensic accounting examination -- hence a bogus deal disguised as an acquisition (more like an expropriation, actually) was required to avoid that pesky little issue The other inference being of course, that a major counterparty failure is beyond the ability of the Fed to remedy -- simply too much money would be involved

To: John Pitera who wrote (9158)	3/23/2008 4:44:06 PM
From: Stoctrash	Read Replies (2) \| Respond to of 33421

JP, Check out the BOA estimates....chopped, sliced and diced, Ginsu style... You can prop stock prices, add liquidity, support bond prices, bail out your friends, take in crap and give em T-bills...but there is no way in hell you can instantly force housing prices higher. I just was talking with relative that last week closed on a high end condo, 50th floor in downtown Miami...he bought it over 2 years ago...and construction was just finished...ouch!! I asked if they worked with him on price, nope....!!! Good thing he's mega loaded so, the 500k he just over paid didn't phase him too much. Funny part is instantly he went on how in the long run it will be fine..lol. Define long run?....uggghhh...