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Politics : American Presidential Politics and foreign affairs -- Ignore unavailable to you. Want to Upgrade?

To: TimF who wrote (29730)	10/3/2008 4:39:12 PM
From: DuckTapeSunroof	Read Replies (1) \| Respond to of 71588

A crisis of CONFIDENCE (where no one trusts anyone to be honest in their trades, or to stand behind the deals they cut and the promises they make) is like a contagion. It SPREADS like wildfire. With standardized (and regulated) products such as standardized options, futures, stock & bond trades, etc. --- they all trade on assigned public markets and have assigned regulators who police the action. There is no "counter-party risk" because the CLEARING EXCHANGE itself backstops all trades. There can be no fear and contagion of "counter-party risk" when there is a responsible Third Party who guarantees all settlements. Re: "A liars market where people understand that it is a liars market...." (That's just it: almost by definition they never 'understand' this. Because, anyone who DID 'understand' that any liar could make a trade and then walk away from it would NEVER ENTER INTO THE TRADE TO BEGIN WITH... so there would be no such market if potential participants understood that trades could be hollow.)