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

To: Metacomet who wrote (26569)	1/27/2010 4:57:40 PM
From: NOW	1 Recommendation Respond to of 71475

they knew and they profited and they still profit.

To: Metacomet who wrote (26569)	1/27/2010 5:11:10 PM
From: Real Man	Read Replies (2) \| Respond to of 71475

They were following models, not orders. The models work while liquidity is present. Once markets become illiquid, they break down, resulting in huge losses. They were taught models in business school. They were not taught about the breakdown. They were taught the Fed will always ensure there is none, so they offloaded all risk on the system through derivatives, and the system blew up. They had no idea they will blow up... some didn't. Those banks blew up. Others got a big payment as the Fed had to become the ultimate counterparty. They really had no choice, and indeed prevented a systemic meltdown. For now, unfortunately. rotman.utoronto.ca

To: Metacomet who wrote (26569)	1/27/2010 5:30:59 PM
From: Real Man	Read Replies (2) \| Respond to of 71475

It the Feds did not do this stuff in 2008, 90% of the banking system would collapse, home loans would be unavailable at all, there would be widespread panic, banking holidays, bankruptcies, and unemployment even much, much higher than it is now. You can say the Feds should have allowed the blowup, since it would cleanse the clogged credit system. No, Bear would not fail alone, there would be a derivative detonation and the domino effect that would topple the system, shutting it down completely around the globe. That was the only reason Bear/AIG/FNM/FRE were bailed out. So, Ben was not lying, neither was Time. -g- The question is, now what? This will be a recurrent problem until a Red Adair style solution