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

To: NOW who wrote (38839)	6/3/2011 6:16:57 AM
From: Real Man	Respond to of 71475

The system is extremely sophisticated, sorry. -g- My post was roughly the answer. Derivatives offload risk onto the system, while the Fed steps in when the system is in trouble. "The system" means a number of large contractually connected counterparties. "Collapse" means if one of them blows up, so do the others due to counterparty risk. We have seen the Fed preventing exactly that outcome in 2008, as they stepped in and guaranteed a number of obligations, wrote a put. Pretty much all of this is not news to anybody, but the details of these markets are certainly very complex -bg-

To: NOW who wrote (38839)	6/3/2011 6:38:53 AM
From: Real Man	2 Recommendations Read Replies (3) \| Respond to of 71475

In a nutshell, because the fed always "steps in" and writes a put whenever this "system" is in trouble, it got more and more reckless with risk. So, the credit bubble now exceeds all credit bubbles previously seen in history. This can't be taken lightly, the consequences were always severe, but it's too late to "fix", we have to go through a prolonged period of pain. Adverse political reaction to pain prompted the Fed to step in and write puts. The bubble grew bigger. That was "kicking the can". They have not done anything differently now, but it seems can kicking the can stopped working? Time to pay the ultimate price?