Fed's rescue halted a derivatives Chernobyl

[AlphaOmega7]

Fed's rescue halted a derivatives Chernobyl

Last Updated: 1:24am GMT 23/03/2008

When the Federal Reserve stepped in to save Bear Stearns, most people had no idea what was at stake, writes Ambrose Evans-Pritchard

We may never know for sure whether the Federal Reserve's rescue of Bear Stearns averted a seizure of the $516 trillion derivatives system, the ultimate Chernobyl for global finance.

"If the Fed had not stepped in, we would have had pandemonium," said James Melcher, president of the New York hedge fund Balestra Capital.

"There was the risk of a total meltdown at the beginning of last week. I don't think most people have any idea how bad this chain could have been, and I am still not sure the Fed can maintain the solvency of the US banking system."

more...http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/03/23/ccfed123.xml

[RobertB]

There are a lot more potential Chernobyls out there so any move by the FED these days is just a temporary bandaid on a financial hemorrhage.

[I'm all 67X]

There are a lot more Chernobyls out there so any move by the FED these days is just a temporary bandaid on a financial hemorrhage.

Sure seems so. I started wondering about this current situation, the possibilities for what could happen and I am truly amazed at the position we are in, it staggers. What could happen? Really?

Could we wake up one day to find:
* all USD is worthless?
* the doors to stores, places of business, gas stations, etc. all locked?
* banks closed?
* our jobs are gone?
* very little to no tv stations airing?
* EBS/EAS on every radio station and news channel?
* troops in all the streets- foreign and domestic?
* phone lines hopelessly overloaded or down?
* no services?
* sparse utilities?
* no contact with loved ones, rioting, gun shots all around, etc., etc., etc.

Sure- it's alarmist thinking, but could it happen? The importance of money nowadays tells me yes, anything is possible. Tucking that in the back of my mind, what would I do day-to-day? Not being one to where my heart on my sleeve, I'm actually trying to let people know what they mean to me, and hoping for the opportunity to share with them my hope. That's a hard task for me.

Looking at the financial precipice we teeter on, nothing is beyond believability for me anymore. The longing for eternity has never been so strong either. Escapist? You'd better believe it!!! Proud of it!

:thinking The thoughts keep coming. No panic, just taking stock of inventory that I'd like to have in order...

[Roland]

There are a lot more Chernobyls out there so any move by the FED these days is just a temporary bandaid on a financial hemorrhage.

I agree, I think what we just witnessed is the tip of the iceberg. All the more reason to keep our eyes on the Lord as the walls come tumbling down.

[RobertB]

Sure seems so. I started wondering about this current situation, the possibilities for what could happen and I am truly amazed at the position we are in, it staggers. What could happen? Really?

Could we wake up one day to find:
* all USD is worthless?
* the doors to stores, places of business, gas stations, etc. all locked?
* banks closed?
* our jobs are gone?
* very little to no tv stations airing?
* EBS/EAS on every radio station and news channel?
* troops in all the streets- foreign and domestic?
* phone lines hopelessly overloaded or down?
* no services?
* sparse utilities?
* no contact with loved ones, rioting, gun shots all around, etc., etc., etc.

Sure- it's alarmist thinking, but could it happen? The importance of money nowadays tells me yes, anything is possible. Tucking that in the back of my mind, what would I do day-to-day? Not being one to where my heart on my sleeve, I'm actually trying to let people know what they mean to me, and hoping for the opportunity to share with them my hope. That's a hard task for me.

Looking at the financial precipice we teeter on, nothing is beyond believability for me anymore.
Could it happen? Of course it could. The problem is that almost no one in this country thinks it could, although many more people might be thinking along those lines now after the recent financial meltdowns. Actually, the financial meltdown here has been slow and methodical in a relative sense. That is, there has been no giant collapse of the economy all at once. The subprime crisis started last summer with rumors and then accelerated into fruition, and is still reverberating. Bernanke looks and acts like the amateur he is, but he probably could justifiably place a lot of blame for his and the economy'sproblems at the feet of the "master of the sleight of hand verbal gobbledy-gook," Alan Greenspan. One thing is certain and that is that things are likely going to get much worse before....and if......they ever get better.

[Victor]

Jesus says to start praying the Our Father :) :candle