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

To: Real Man who wrote (11850)	9/26/2008 12:01:38 PM
From: dybdahl	Read Replies (1) \| Respond to of 71454

What you're saying now, is that the problem is not about derivatives, but about interbank payments. Interbank payments can be solved using catalyst mechanisms. I assume that your post is basically a confirmation, that not all derivatives, that blow up, have significant collateral damage. Your post also indicates, that this is not a bubble but a trust problem. I don't understand how this fits with your previous claims that we're witnessing a bubble. I think that we're witnessing a bubble, but I think the bubble is mostly about underestimating the consequences of U.S. debt. Nobody has presented data to me about a derivatives bubble, that precisely illustrates a problem. I may have missed a post or two in this thread, but most posts, that I read, copy numbers without being critical about what the numbers really mean.

To: Real Man who wrote (11850)	9/26/2008 12:13:14 PM
From: carranza2	2 Recommendations Read Replies (2) \| Respond to of 71454

Yes, kind of like horse-traders A and B who serially sell the same horse to each other except each sale is for $25 more. They are both happy and both are making money very nicely until the horse dies and so does the trade. In that case, the debts and promises A and B made to banks, etc., while the trading was good cannot be paid and they both blow up. The folks who guaranteed A's and B's debts blow up, too, because the trade seemed so good and so steady that they took their own silly positions based on what A and B were doing. But those folks are also guaranteed by someone else who decided to get a piece of the action, and so forth, with multiple guarantors until the chain of guarantees ends. Blow ups go up and down the line until the total losses are enormous. Chaos hits all markets. In the meantime, other guarantors who relied on Horse Traders C and D who were trading on another horse, which was also sure to die someday, get very nervous as they see the problems that can arise when horses die. Credit freezes up. Nobody guarantees anything anymore. In the meantime, a rare disease hits all horses and they start to croak left and right. It HTF for everyone involved, esp. the newer players who got into the game when they saw the easy money everyone else was making. The horse trading market ends up in a huge pile of horse manure. Except in Europe, where there are no horses. vbg All over horses everyone but everyone knew were going to die or get lame some day.