Reply #6: Actually, it's even worse.

[brokensymmetry]

Yes, the existing mess is bad. Keep in mind that there is
some large amount (no one knows exactly how large) of complex
financial derivatives out there. By the way, those derivative
securities are largely unregulated and to a great extent not
fully understood...not understood by those who created them,
nor those who sold them, nor those who bought them.

What happens if the underlying financial system is damaged
by the current mess? What happens to the value of the aforementioned
derivatives? By the way - derivatives are owned by your pension fund,
your mutual fund, your bank, and your insurance company.

Can you explain a CDO4? Do you know the risks involved? Can
you explain them? No? Well neither can I or anyone else. But they're
out there in the portfolios of every teacher, police officer, fireman,
and everyone else who owns financial products.

Add in Peak Oil, happening as we speak. Factor in some climate
change. Stir in some inflation. Crank up the possibility of
global resource wars (Iraq, anyone?). Then consider China and
India as they enter the world stage as powers to be reckoned with,
as players who want all the good things we have.

Oh, yes...and then there is consumer debt. What happens to those
who owe the debt in a financial retraction? What happens to those who
own that debt when it defaults?

The feast of consequences lies before us - and we have, so far, only
nibbled at the edges of the first hors d'oeuvre.