To: robnhood who wrote (138464 ) 12/5/2008 9:04:07 AM From: E. Charters Respond to Yes it was an excellent read and the first good explanation of the market forces we have seen recently. The massive selling spree lately whose culprit has been pointed to by Forbes as the CDS overhang, that scandalous credit default market that should be outlawed. Let's face it, money is borrowed on time, squandered, and not all the insurance in the world can pay it back if it goes south. No point in three organizations going bankrupt if one fails. The bank and the borrower is enough. The insurance company too is one too many."Instead, the Fed managed to establish currency swap lines with various foreign nations, under the guise of supplying them with dollars. This need for dollars arose partly as a result of the actions of the Fed, in sequestering Eurodollars in July, and partly as a result of the multiple credit default events which triggered over $2.5 trillion worth of selling in the stock and commodities markets, as 50 to 1 leveraged players were forced to cover about $50 billion worth of credit default insurance obligations.
