Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Real Man who wrote (5875)	4/4/2008 11:38:09 PM
From: saveslivesbyday	Read Replies (1) \| Respond to of 71400

"However, as the market goes down and blows though put strikes, the market makers will be forced to hedge their puts by selling the market short in the futures, resulting in a market crash." I imagine this is what was in Bernanke's mind on Monday morning March 17th. They could see the collapse coming, and also the DOW and S&P futures hovering below critical support levels.

To: Real Man who wrote (5875)	4/4/2008 11:45:07 PM
From: Secret_Agent_Man	Read Replies (2) \| Respond to of 71400

well bring it On!-Example: Bear collapses, can't pay 17 billion on contracts owed to Citi. Citi can't collect, must record 17 billion loss on their book. Citi collapses. Can't pay their 40 billion they owe to Morgan Stanley. Morgan Stanley collapses. And so on.

To: Real Man who wrote (5875)	4/5/2008 8:50:25 AM
From: DebtBomb	Read Replies (5) \| Respond to of 71400

Dominoes? Yep....and stay focused....don't get distracted by the bottom callers....keep a longer term view, IMO. No one is addressing the longer term. The Collapse of American Power Noam Chomsky recently wrote that America thinks that it owns the world. That is definitely the view of the neoconized Bush administration. But the fact of the matter is that the US owes the world. The US “superpower” cannot even finance its own domestic operations, much less its gratuitous wars except via the kindness of foreigners to lend it money that cannot be repaid. The US will never repay the loans. The American economy has been devastated by offshoring, by foreign competition, and by the importation of foreigners on work visas, while it holds to a free trade ideology that benefits corporate fat cats and shareholders at the expense of American labor. The dollar is failing in its role as reserve currency and will soon be abandoned. When the dollar ceases to be the reserve currency, the US will no longer be able to pay its bills by borrowing more from foreigners. I sometimes wonder if the bankrupt “superpower” will be able to scrape together the resources to bring home the troops stationed in its hundreds of bases overseas, or whether they will just be abandoned. baltimorechronicle.com

To: Real Man who wrote (5875)	4/5/2008 8:56:50 AM
From: DebtBomb	Read Replies (1) \| Respond to of 71400

If you cannot repay your debt and loans....what do you do? Crash your currency? Pull off a major transfer of wealth? ????? What do you do?

To: Real Man who wrote (5875)	4/5/2008 9:39:01 AM
From: RockyBalboa	Read Replies (1) \| Respond to of 71400

Vi, ideally it is a (near to) zero sum game. A futures contract, or a swap distributes money from one counterparty to another. But keep in mind the piece from Barclays about the counterparty risk (with emphasis on CDS) and the associated costs of replacing contracts. In that piece barclays describes very well how counterparty failure creates additional exposure because hedges etc must be replaced... gap risks and additional points for a "good" counterparty. This goes so far that they estimated points depending on the counterparties creditworthiness. See in one of your earlier posts (below) Obviously what is not factored in is that, through leverage, defaults (or call it deleverage) can multiply in size. For every $1 in lost equity the modern commercial bank must cut its business by $10. One large default puts its ability to support a multiple size of other contracts at risk. That makes a thermonuclear chain reaction, Chernobyl-style possible. Message 24433971