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Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: axial who wrote (19013)	3/25/2009 3:53:17 AM
From: Real Man	Read Replies (3) \| Respond to of 71475

Cancellation of contracts is a necessary step to clear the system. However, nationalization of failing casino players (such as AIG) results in all other players at the craps table getting paid. Obviously, a lot of Moral Hazard is involved. On the other hand, you just can't nationalize strong players at the craps table, such as GS or JPM. Pushing for "expanded powers" of the Fed and the Treasury, so that they can implement receivership for hedge funds and insurance giants, is the right way to go, IMHO. Then the contracts don't get paid, at least, not the full price, and all players at the craps table who destroyed the system ultimately get nationalized, broken up, and sold back to public. As a result of such reform, hopefully, we will no longer have "too big to fail" dangerous financial institutions. If it is implemented well, that is. I hope congress grants expanded powers to the Fed and the Treasury similar to FDIC. Then the next step will be... receivership for AIG, which has been used as a tool to channel the government money to GS this Fall. Was AIG a "plot" by the "criminals"? I doubt it. It failed, so the government took it over to avoid the big "splash" from derivatives, just as they did with Bear. They did not do it to Lehman, the "splash" happened, TED spread got to 5 and the DOW got cut in half. Lehman was a small player. <G> We will look at the new BIS statistics for December 2008 to see if there is any hope. Naturally, as pessimists would say, the same people are running the show, so ... are they all bought? My answer to this is yes, the same people are there. However, this does not mean necessary reforms won't be implemented as the administration and the public anger keep pushing for it. Simply put, they have no choice.