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Pastimes : The Philosophical Porch -- Ignore unavailable to you. Want to Upgrade?

To: Zincman who wrote (5286)	1/14/2010 12:03:07 PM
From: Real Man	Respond to of 26251

This is what blew up in 2008. They applied liquidity fix, so it grew bigger. Now, I am not going to predict the future, but it would make me far more comfortable if this monstrosity deflated. 23.7 Trillion Government bailout was required to produce 2009 Stock market returns. In comparison to US GDP, it's about 1.5 times larger. The bailout reinflated the derivative monstrosity to new highs, and thus decreased market volatility, pushing SP500 to a large gain. It will blow up again because of it's shear huge size, and the next time 100 Trillion bailout will be required. I'm not going to predict whether or not it will be provided, but if this bubble is accomodated by authorities like it was since 1987, we might have hyperinflation. If not, there will be another crash, even more devastating than 2008. The market is synthetic, price only depends on these derivative instruments, which now account for all the volume. This is far, far larger Ponzi than Madoff ever dreamed about, and the "save" was the same as the ones before, ones that got us to 2008 meltdown and the great recession. -g- No, I don't know when it blows up, but that is not determined by the economy. Rather, liquidity. -g-