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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Hawkmoon who wrote (10419)	10/24/2008 10:41:10 AM
From: MulhollandDrive	Read Replies (1) \| Respond to of 33421

2.bp.blogspot.com check out the chart more discussion here: jessescrossroadscafe.blogspot.com He who sells what isn't his'n Must buy it back or go to Prison. Daniel Drew Naked short selling and float and reserve plays are causing a record 'failures to deliver' in the US Treasuries markets. Some of this may be a 'kiting' scheme in which the sellers are playing an aribtrage against the slight fees and penalties versus returns on price distortions and extremes in volatility. Or it might be a case of selling and using the same thing so many times as collateral that you don't really know what is your actual condition, solvent or insolvent. We can think of several (roughly nine) derivative and instrument laden banks that are utterly insolvent if forced to deliver their net obligations. The Fed cannot even regulate its own products among its own dealer circles. What could possibly possess anyone to believe that they can do this with any other product in a larger, less exclusive market? There are system breakdowns that have caused signficant spikes in failures, such as the widespread technical failures following the distruptions caused by 911. But we are not aware of any massive computer system failures and shutdowns at this time. This may be a case of when the going gets tough, the frat boys bend the rules until they break, and then line up for a slap on the wrist from dad's business associates. Is this because of the failures of Lehman and Bear Stearns and AIG? Hard to believe but we have an open mind. Transparency builds confidence more effectively than rhetoric and empty promises. Who are the responsible parties? Let's have a list of the prime offenders of this market. We might not be surprised at who is failing to deliver what they sell. It might be an indication that they are in trouble. Oops, perhaps that is why we can't have it. We suspect the Fed is turning a 'blind eye' to this activity. But more transparency would be helpful to alleviate that concern. And do not be surprised when other things that you think that you are buying or think you own fail to show up. There are some who see an approaching 'fail to deliver' spike at the COMEX and they may be right. There were some who believed that LTCM was short 400 tons of gold at the time of its failure, and that several central banks stepped in to depress price and increase supply to alleviate the potential shock on counterparties. Replay in progress? It could get interesting if it is.