Looming Market Risks

[boarderbloke]

I think Bernanke and the IMF(remember she's from Chicago, IMF head) will do what ever Obama wants him to do, and I think they'll keep the equity market rolling even with $4.50/gal gas till pass the election or perhaps let it all crash down maybe 2 or 3 weeks just prior to the US general election.(depending on whether he's polling ahead or behind the GOP
This thing is all fixed, that's why gold hasn't broke $2000 yet.

[cottonpicken]

Its a complicated topic,that has so many
variables,that predicting the outcomes is possibly an
act of futility.

So the quote "i'm no gynaecologist but i'll take a look"
means its interesting and fun non the less.

The system is inter connected.

If greece out right defaults and triggers a cds
payment(credit default swap) it is very very possible
that the top 5 us banking institutions are DEAD.

Why?because of the leverage in the banking
system,which a whole topic unto itself.

People and institution who where buying bonds would
also goto the cds market to insure their investments.

But the cds market was also selling more than what
was required to cover the total bond market.

Astute investors like Kyle Bass who seen what was
happening placed large bets in the cds market and
now are looking multiple thousands of percentage
point gains,like 6500% gains.

The funny part is the people who regulate the cds
market-the isda-are the very same people who sold
the cds in the first place.They decide who gets paid.

It doesn't take much analysis that the cds payout will
never be triggered .

So the question is-if these bonds are not
insurable,what are their value?

Greek bond holders are facing a 70-80% and they
probably want a 100% to trigger a cds payout,because
the excuse the isda will use is that its not a default.

So now we start wondering about all the bonds
around the world.

We wonder about the big bond holders-aka the
banks-and we wonder if those banks are solvent
when those bonds they hold are devalued.

That is why you keep hearing about bank
recapitalization.

Which brings us to central banks backstopping
everything-aka qe

Which brings us to the early 80's,lol.

The market functioned properly,let interest rates rise
and we survived,barely.

Let interest rates this time-total system failure why?
total debt is unserviceable in a high interest rate
environment.

[cottonpicken]

Errol,my argument on deleveraging is that the central
banks and tax payers are taking on the bad debts in
an effort to recapitalize commercial banks.

[hobbyfrmr]

Agreed , I answered a question in the machinery
forum and it's posted over here. This is supposed
to happen April 1! It would be no surprise if I am
responsible for the error, ultimately, it's no big
deal to me. Stuff happens.

[cottonpicken]

People post in other forums?

[mcfarms]

Theres other forums?

[ColevilleH2S]

Who cares about other forums, I want a working edit button.

[errolanderson]

Cottonpicken . . . great comments. It is
genuinely scary times right now as
global financial markets are a deck of
cards. I can see your viewpoint that
deleveraging could trigger a global
depression.

My fear is that it will be unavoidable.
Hope this is dead wrong.

good discussion

Errol

[sumdumguy]

They dont ever need to raise interest rates if
governments can just print money because they
dont need to pay for capital. How convenient! I
wonder what would have happened in 2008 if the
opposit were the case. If interest rates were not
kept artificially low, farm land, houses, commodity
prices would be much different. I knpw guys who
are saying, borrow all the money you can, its
free. Live for today, tomorrow mwy never come.
Price is no object. I remember the 80's, this time
the government is letting the prices sky rocket.
What is going to burst the bubble cotton?

[cottonpicken]

Not to sure.

But i think it will be capital running away from
paper,which has already begun.

Wether a black swan event flips everything
overnight,or just a slow gradual inflationary
depression like japan that takes hold over the years,i
don't know.