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

To: Skeeter Bug who wrote (88776)	7/14/2009 10:53:27 PM
From: Real Man	Read Replies (1) \| Respond to of 94695

Liquidity means lower volatility, and computerized bets to short it (through options selling; this is how WS makes money), which, in turn, leads to higher markets and lower dollar. Lack of liquidity means computers lack buying power, and are taken out in "crashes" since they are extremely leveraged. You know the numbers, 700 Trillion notional and stuff, which was 30 Trillion REAL value of contracts as of December 2008... equal to global stock market cap, but of course leveraged to a mind boggling degree. You are right, T-bonds represent the biggest risk. Not only that, but due to interest rates being by far the most leveraged market. So, a black swan in bonds will topple the derivative pyramid, short circuit WS computers, and the crash law will apply. It is impossible to time this event, and for now the Fed sure patched things up. At some point it will all hit the fan, although I suspect the Fed will print as much as needed to prevent it, causing hyperinflation, cause the beast will need more and more. Thus my bets. At some point when inflation resulting from all this becomes a grave concern, we the people will can the Fed, nationalize and break up "too big to fail" manipulative banks tied to them, etc. But we are not there yet