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most likely reason that the whole scheme blew up - too many people became aware of the gigantic short sale going on. Two effects: 1) bidding up the price of a CDS and 2) some gamblers started to sweat and fidget (not a good sign for gamblers).

I'll throw in one other off-the-wall suggestion on the holdback of further bail-outs at present: they can't sell enough bonds. The Chinese, Saudis, etc. may have told them that they're not in the market. The Chinese, for one, have decided to use what's left of the US$ credibility to finance their huge infrastructure, public-works projects.

paul spencer

by paul spencer (paulgspencer@gmail.com) on Tue Nov 18th, 2008 at 11:07:32 AM EST
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"they can't sell enough bonds"
That's what a lot of us have been waiting for- or fearing-- the ultimate day of reconing.  You could be right.

"--use what's left of the US$ credibility to finance their huge infrastructure, public-works projects."

Paul, to fail to prop up the bond zombie will immediately trash that cred.
The time frame would seem to favor converting cash held into commodities, real estate--real-world assets- while keeping the corpse moving enough to sustain the illusion. But that's an awful lot of real assets. Who could miss a movement that size? How could it be hidden? Look there, I think.


Capitalism searches out the darkest corners of human potential, and mainlines them.

by geezer in Paris (risico at wanadoo(flypoop)fr) on Wed Nov 19th, 2008 at 10:44:38 AM EST
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