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

To: carranza2 who wrote (84912)	1/10/2009 11:00:28 AM
From: Real Man	Read Replies (1) \| Respond to of 94695

We can argue until the cows come home, but since all this is unprecedented, it will just happen the way it will. One thing is certain - any way these contracts unwind will be pretty ugly. So far so bad, the Fed has been taking the "blown up" side of these contracts (the guarantees), cause if they don't, the global financial system goes. Most of reported 9 trillion is not actually money, it's guarantees - in other words, derivatives. In particular, CDS. -g-

To: carranza2 who wrote (84912)	1/10/2009 5:49:49 PM
From: Real Man	Respond to of 94695

Note that derivatives are extremely concentrated at the large financial institutions, in particular those that deal directly with the Fed. Three institutions are most vulnerable - JP Morgan, Bank of America, and Citigroup. So we have seen Wall Street collapse, but few smaller banks failed. Can we live without those? Yep. What will be the big domino derivative collapse then? These three institutions will fail, along with a few other large derivative players in the top 10 (such as Wells Fargo, now #4) and a few similar foreign institutions, such as UBS. Hundreds of smaller banks will be OK. <g>