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.

Politics : GOPwinger Lies/Distortions/Omissions/Perversions of Truth -- Ignore unavailable to you. Want to Upgrade?

To: geode00 who wrote (139395)	9/29/2008 10:44:30 PM
From: Kevin Rose	Read Replies (2) \| Respond to of 173976

Yes, the leverage definitely magnified the fallout. The spreading of the risk meant that ALL players were taken out at once. What do they tell troops in combat - don't bunch up because one round will take you all out. The underlying issue is still the lack of market for these beaten down assets. Once those assets are shored up, then the line of dominoes is also shored up. Once that happens, banks and other financial institutes are not as likely to hoard cash and withhold credit. The theory is that the lifeblood of credit starts to flow again.

To: geode00 who wrote (139395)	9/30/2008 2:39:11 PM
From: TigerPaw	Read Replies (1) \| Respond to of 173976

The biggest part of the problem is that the debt-backed securities are bought on credit, and then the options for those are bought on more credit. The mortgage itself usually relies on 5% to 20% down, but the securities and especially the options are based on about 1% down. The answer will be to require the hedge funds and investors and companies who are hedging to actually put money behind these purchases. A 50% margin requirement would be a good start, just like at the brokerages. TP