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Play It Again Sham

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#31 Goldmember


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Posted 30 July 2009 - 01:19 AM


No no You're missing the point. Up phases are caused, directed, and managed from a dark room somewhere underneath the Eccles Building.

I think too much emphisis is onthe Fed during this rally since March. While I conceed that it may very well be some version of the windowless room, perhaps in the Eccles building or elsewhere, think we also need a portion of the scrutiny to be also cast upon upon a possible windowless room in some Treasury room somewhere, and let's not forget the [i]windowless rooms/i] that must abound within the various departments of the Gang of Tweens Primary Dealers wich by then the cacophony of chaos probably even scares the whales away...

I will say this appears to be a very smaht move by the Treasury to place this many bongs at this time. Git it while the gittin' is good, and causes the least damage and pressure on other speculative and investment vehicles out there, the hopes and dreams and crossed fingers of the dispossesed.
Anthony caused pearls to be dissolved in wine to drink the health of Cleopatra; Sir Richard Whittington was as foolishly magnificent in an entertainment to King Henry V; and Sir Thomas Gresham drank a diamond, dissolved in wine, to the health of Queen Elizabeth, when she opened the Royal Exchange; but the breakfast of this roguish Dutchman was as splendid as either. He had an advantage, too, over his wasteful predecessors: their gems did not improve the taste or the wholesomeness of their wine, while his tulip was quite delicious with his red herring.here

#32 Jorma


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Posted 30 July 2009 - 01:20 AM

Assuming that we are discussing treasuries for purposes of argument, there are the underlying securities and then there are several levels of derivatives. Each of these types of instruments are treated differently for accounting purposes. Each requires different initial funds and costs to hold. There are limited number of bonds to be traded, but unlimited numbers of counterpart futures and option contracts, yet another example. Again for example, the power of futures has been long recognized as being able to move the price of the underlying securities.

The existence of the multiple derivatives for every sort of financial instrument in fact creates demand for the underlying instrument, in a virtuous circle. Until, like with mortgage backed securities, the circle turned vicious. When every last warm body to take a mortgage had been found. When it came to pass that the hedges and the CDO's were backed by nothing but confidence, which found a limit.

It must be logically incorrect that "There are limited number of bonds to be traded, but unlimited numbers of counterpart(ies)". The dizzying abstractions that are derivatives suppose a world without limit but it is an illusion. Either that or wealth would be unlimited and poverty would end.

An incremental increase in credit can create wealth and derivatives can facilitate that creation. Beyond that quite finite limit the derivatives serve to transfer wealth or create fictitious wealth out of fictitious capital.

Debt itself cannot be unlimited. This isn't just a financial or monetary matter or a practical matter. It's a matter of moral philosophy. Or in other words, FU.

War is the last great hope of the incompetent to order the unwilling to attempt the impossible.
William Eastlake 'The Bamboo Bed'

Change you can suspend your disbelief in.


The Treasury

could burn down

We jammin still

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