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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: William H Huebl who wrote (84892)	1/10/2009 4:02:59 AM
From: Real Man	Read Replies (3) \| Respond to of 94695

Derivatives notionals just started to top, which means the bulk of the BK is still ahead of us, as bad as 2008 has been. Very hard to time, as usual. So far only a fraction of the gambling universe (hedge funds) is gone with the wind. I would expect 98-100%, for both derivatives and the gambling universe. The bulk of this universe will disappear this year. Before this is over with, I'd be surprised if these financial instruments still exist. That gambling universe will sure make it difficult with the BK moves, as they can both go long AND short. We'll see wild moves. We did not have an outright collapse of the financial system SO FAR entirely thanks to the World Fed - US authorities, and others, injected obscene amount into this Ponzi scheme, 8-9 Trillion for US alone. Yes, that much. It effectively shifts blown up derivatives on US Fed's balance sheet. This, of course, undermines the dollar in a big way. If the dollar is compromised and tanks hard, expect 500 Trillion in interest rates swaps to blow up, and a wipeout of the global Financial system. Message 25311385 The financial crisis of 2008 was ALL ABOUT DERIVATIVES. This is why obscene amounts from the Fed and the treasury did not work to save the bubbles, this time!

To: William H Huebl who wrote (84892)	1/10/2009 4:19:28 AM
From: Real Man	2 Recommendations Read Replies (1) \| Respond to of 94695

We crashed when CDS blew up. This is not the biggest fraction of the pie. When T-bonds crash, expect things much worse, as the biggest fraction of the pie, the interest rates swaps, will blow up. Expect much higher rates and much lower dollar. Citi will likely collapse first, triggering the collapse of JPM, BAC, WFC, and a number of foreign banking institutions. No bank is safe, but small US banks did not participate in this scheme, if only indirectly. In general, one would expect a cascading domino effect, a collapse of the World financial system, when large derivative players fall one after another. No Western country is safe. The key reason huge injection of reserves by the Fed did not stop the collapse is that banks stopped trading with each other. Why? Was it Joe six pack who doesn't pay the mortgage? Yes, that's the key reason - the global economy can't support the Ponzi scheme of this size. But in a more concrete way the reason is counterparty risk. As you don't get paid, netting of derivative positions becomes useless, and notional value becomes real value. The BK is very likely to be devastating, with even 1929-1932 period looking like a walk in the park. IMHO.

To: William H Huebl who wrote (84892)	1/10/2009 4:48:00 AM
From: Real Man	Read Replies (1) \| Respond to of 94695

The only reason I was somewhat bullish was that the obscene amounts of liquidity have a good chance of stabilizing the derivative bubble, if only for a few months. This acts as a buffer, reducing volatility and taking the stress off the Ponzi scheme. Certainly, enough was injected to do that in the short to intermediate term. However, longer term nothing can stop the coming collapse. The timing of the BK is still unknown. Will it be now, this Spring, this Fall, next year? We keep waiting. My protection choice remains gold, a market that is outside the derivative Ponzi scheme. To a degree it was part of it, which is why gold and gold stocks tanked (the futures positions). But, when financial system collapses, folks will purchase physical precious metals, as they do now. Those are money not controlled by any government, derivatives, or debt, if purchased in the physical form. The bulk is off accounts, as most of financial system will collapse, leaving these accounts vulnerable. I keep a little on the accounts for the fun of trading, about 10%, to hedge these positions and to play. If it collapses or I screw up, I won't go broke. <g>