Posted on 09/19/2007 6:51:42 PM PDT by Revel
The credit bubble is just starting to unwind, a credit-derivative insider says. And while U.S. borrowers are being blamed for the mess, they were really just pawns in a global game.
Jon Markman
Satyajit Das is laughing. It appears I have said something very funny, but I have no idea what it was. My only clue is that the laugh sounds somewhat pitying.
One of the world's leading experts on credit derivatives (financial instruments that transfer credit risk from one party to another), Das is the author of a 4,200-page reference work on the subject, among a half-dozen other tomes. As a developer and marketer of the exotic instruments himself over the past 30 years. He seemed like the ideal industry insider to help us get to the bottom of the recent debt crunch -- and I expected him to defend and explain the practice.
I started by asking the Calcutta-born Australian whether the credit crisis was in what Americans would call the "third inning." This was pretty amusing, it seemed, judging from the laughter. So I tried again. "Second inning?" More laughter. "First?"
Still too optimistic. Das, who knows as much about global money flows as anyone in the world, stopped chuckling long enough to suggest that we're actually still in the middle of the national anthem before a game destined to go into extra innings. And it won't end well for the global economy.
An epic bear market
Das is pretty droll for a math whiz, but his message is dead serious. He thinks we're on the verge of a bear market of epic proportions.
The cause: Massive levels of debt underlying the world economy system are about to unwind in a profound and persistent way."
Follow the link for the best explanation I have ever read.
http://articles.moneycentral.msn.com/Investing/SuperModels/AreWeHeadedForAnEpicBearMarket.aspx
(Excerpt) Read more at articles.moneycentral.msn.com ...
I once owned a retail business, The damn thing NEVER made any money, I kept it for 15 years and sold it at a nice profit. I guess the buyer saw something beyond the books i showed him.
Personally I have followed the markets for years and years and have never even heard of this guy. I’m not saying he is not a smart guy but only that he is an unknown at least on the outlets I use to gather info.
That's what I was thinking, stock prices seem to be doing a great job of climbing our 'wall of worry'. I've always found it hard work to keep a good hold on reality with all this negativity, but I guess the fact that it's difficult is the reason that it pays so well.
That would make them happy. After all, a surplus is the only thing that matters.
yeah, I know. But it's different this time...
Yes, it’s a “new paradigm”
If the worldwide economy tanks as badly as the article suggests it will, gold will also be useless. The only valuable commodities then will be the same ones that have been valuable throughout the history of mankind in times of trouble: food (ie land), women, and weapons.
After all, Money = Debt, and that is what the Fed does best.
In the end they will have to raise rates to gargantuan levels after prices get out of hand. I wish them luck because there is no political will to do so.
BUMP
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