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To: re3 who wrote (768)	4/5/2008 8:33:43 AM
From: Real Man	Respond to of 990

Something like that, if the Fed loses the war. They have been managing derivatives markets for some time - we have two or three PPTs working on it. All that to prevent a meltdown, and it has led to dramatic growth as a result of the moral hazard associated with this systemic protection. The Fed does not have infinite powers. Their 2 powers are 1) Managing interest rates 2) managing the printing press Now, it does NOT strike you as weird that most notionals are in interest rates swaps, does it? That's where the most protection is, since the Fed is managing that. When the T-bond market topples, we'll have a meltdown. Expanding Fed powers? That may postpone the meltdown, making it much worse. If they allowed derivative melt in 2000, the consequences would have been about 10 times less than today. They did expand their powers already. Who is JPM? The Fed. What is JPM's derivative position? 100 Trillion notional, 20% of the market.