DOW lowest since april . Down below 12,600.

reply to post by traderonwallst

You talk about Ponzi scheme and you have right:

CDO/CDS problem...
...the "Dark Fiber" Ponzi scheme perpetrated by the telecom's and Enron back in the late 1990's/early 2000 period.
You remember that little scheme, don't you?
The telecoms would write "swaps" contracts with each other whereby they would both promise to let each other use the others (unsued, over-built and not necessary) fiber-optic networks. Each party to the contract would then book the swap as "revenue", pumping up their numbers to present to Wall Street. Wall Street would then issue a "buy" rating to its suckers...errr..."investors".
Furthermore, the ratings agencies also gave many of the telecoms high bond ratings based on these bogus numbers and hundreds of billions of bonds were sold to unsuspecting bagholders--ultimately to be defaulted upon.
Well, fast-forward a mere five years after the collapse of that scheme and we have in its place a far, far larger of of CDOs/CDS. Wall Street has created over a trillion dollars of VERY suspect CDOs (collateralized debt olbigations), then has "pyramided" them on top of one another in a Ponzi-like fashion, and sold them off to unsuspecting idiots (who should have known better).
In addition, the ratings agencies have stamped much of this rotten garbage with high ratings--just like they did the telecoms--and finally, we have added about $45 trillion in "Credit Default Swaps/Insurance" promised by a bunch of soon-to-be bankrupt entites to further entice fools to buy off on this debt.
Now the system has imploded and the carnage is much larger than the relatively isolated dark fiber swaps collapse. This time it involves virtually every pension fund, insurance fund, money market fund and bank--worldwide.

Peace.

vojvoda wirtes

If OPEC countries, PR China, Russia and Japan dump $ by night, world would finish in Armageddon.

you know that as america continues to run large trade deficits, and other country's run up large amount of dollar reserves, they have these large Soverign Wealth Funds, and instead of investing these reserves back into dollar assets, more and more SWF's are looking to diversify into appreciating assets w/ more growth opportunity's. Foreign investment in the u.s declines as a % of money spent and these SWF (especially when OPEC country's SWF funds invest more outside of dollar assets (i.e instead of in gas futures) then these country's will then price oil in a basket of currency's (dollar, euro, rupee, yen, yuan) and then drop the dollar pegs. When these soverign wealth funds of OPEC nations diversify out of dollar assets you could expect any protection they get from our military (cough, house of SAUD) to evaporate. How ever if they our not getting out protection and they diversify out of $, you would probably be preparing wise preparing for an attack, although we can't covertly attack everyone, and it is likey the last desperate throws of an empire.

t every time now the fed cuts intrest rates, it is just like the fed cutting the standard of living. but its not like raising rates would do much good either this would crash the economy. in short the u.s is F(**ED! and we don't even know it.

when did rome realize they were done? only when it was crumbling before their eyes

[edit on 11-1-2008 by cpdaman]

Originally posted by cpdaman
you know that as america continues to run large trade deficits, and other country's run up large amount of dollar reserves, they have these large Soverign Wealth Funds, and instead of investing these reserves back into dollar assets, more and more SWF's are looking to diversify into appreciating assets w/ more growth opportunity's. Foreign investment in the u.s declines as a % of money spent and these SWF (especially when OPEC country's SWF funds invest more outside of dollar assets (i.e instead of in gas futures) then these country's will then price oil in a basket of currency's (dollar, euro, rupee, yen, yuan) and then drop the dollar pegs. When these soverign wealth funds of OPEC nations diversify out of dollar assets you could expect any protection they get from our military (cough, house of SAUD) to evaporate. How ever if they our not getting out protection and they diversify out of $, you would probably be preparing wise preparing for an attack, although we can't covertly attack everyone, and it is likey the last desperate throws of an empire.

You know why is Iran so much arrogant [they dumped $ as reserve currency and trade oil for Euro and yen]?
And don’t worry for House of Saud . Saudi military is strong and nobody would attack them [I mean other state].

Originally posted by cpdaman
t every time now the fed cuts intrest rates, it is just like the fed cutting the standard of living. but its not like raising rates would do much good either this would crash the economy. in short the u.s is F(**ED! and we don't even know it.

You know if FED raised interest rates years ago and allowed recession which was obvious, US economy would be survive without major problems. But no, Bernanke thinks that recession can be prolonged with pumping more liquidity into banking system.
So, now is too late and process is out of control so FED decided to weaker and weaker dollar [which lead into inflation] or otherwise, economy would crash and finish in another Great Depression.

Originally posted by cpdaman
when did rome realize they were done? only when it was crumbling before their eyes

That was different times.