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...whether it takes the form of promises or actual bailout actions. The real problem, that none of these jerks wish to talk about, is the mass of derivatives obligations, that are in the quadrillions of dollars.
So, a hyper-inflationary bomb, crushing the international financial system. Until these pricks just shut down the whole derivatives trade--wipe these gambling obligations off the books of the financial system--everyone is just kidding themselves.
The truth here is the hyper inflationary factor which resides in this derivatives trade situation which has been and continues to be unregulated and insanely leveraged. This is the great crime of Alan Greenspan and that crime is what is killing everyone.
It was known aback on July 1, 2008 that JP Morgan Chase, Bank of America and Citicorp, had then current outstanding derivatives contracts, totaling $179.4 trillion dollars. At that time the three banks combined had total assets of just under $5.6 trillion, a 32 to 1 debt to asset ratio or $32.00 dollars of debt to $1.00 of assets!
Furthermore, as of nine and a half months ago on Dec. 31, 2007, according to the Bank for International Settlements, the total over-the-counter and exchange-traded derivatives totaled more than $675 trillion. Those number have exploded beyond any capacity of the world wide financial system to manage and control with the true figures being multiplied into the quadrillions (10 followed by 15 zeros) as defaults by thousand od derivatives holders have forced the obligations into the stratosphere. These are obligations that the present world system could never repay, not ever!
Unless and until this derivatives bubble is dealt with, which cannot and should not be bailed out, the financial apparatus and government is simply kidding itself. It is time for Hank Paulson to allow the only real medicine to be brought in and applied.
That medicine is bankruptcy reorganization of the entire, dollar-based financial system. The first step in such a bankruptcy reorganization will be the cancellation of these quadrillions of dollars in pure gambling obligations.
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