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

To: ayn rand who wrote (23463)	10/13/2009 3:30:28 PM
From: I_C_Deadpeople	Respond to of 71475

Red Green called duct tape "the handyman's secret weapon".. My cousin, who is a handyman, calls it "Mexican solder".

To: ayn rand who wrote (23463)	10/13/2009 4:09:52 PM
From: Real Man	Respond to of 71475

I don't underestimate that duct tape. It's 2009, 22 years after 1987 (a crash caused by flat implied volatility on options), 15 years since the Mexican crisis, 11 years since LTCM. Still ticking... now 10x the leverage that existed during LTCM crisis and 60x what it was in 1987. No wonder we needed 12 Trillion in guarantees and 1.5 Trillion printing in 2008, while 40 bln short term injections and a few 1 bln. coupon passes turned the stock market back in the Fall 2002. What caused 1987 crash? emeraldinsight.com Didn't read that thing completely, but I think it was the flat IV on the puts that tended to cause an avalanche of selling once the price blew through put strikes. These early models, they weren't perfect. The ones used for credit in 2003-2007 were a lot better. Ditto the damn vol. smirk. It sure helped in 2008. A week of 600-800 DOW down days is not a crash. The markets were not shut down. We now have PPT tied directly to infinite money at the Fed to protect us. Our models are much better. Our computers are much faster. We can manage 100000-fold leverage. <GGG> The NEXT meltdown will require 200 Trillion in guarantees.

To: ayn rand who wrote (23463)	10/13/2009 4:35:51 PM
From: Real Man	4 Recommendations Respond to of 71475

The truth is, if none of these bailouts of failed counterparties happened - 1987, the Mexican crisis, LTCM, Enron, Bear, AIG, etc., the shadow banking system would move out of the shadow, all by itself! Now we have to think of a good solution for it to do so, and there is none. They are content picking up nickels in front of the steamroller. As long as there is liquidity and the Fed guarantees it, sweet $$$ flow from the printing press directly into their pockets, and the steamroller never comes. Nickels become dollars, then billions of dollars. They pay fat bonuses. You lever it up to get a lot more nickels. The "free market" becomes completely inefficient, since the volume from real investors is tiny. Price discovery is absent, it is all determined by the robots who trade trillions of nickels. Not that any of this helps the real economy. -g-