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Friday, October 10, 2008
62 trillion
Sixty-two trillion dollars is the amount generally now agreed upon by financial experts as the true amount in credit default swaps worldwide that are now at the core of why the credit market is frozen. Imagine thousands of poker players(banks) worldwide and for example they all bet on let's say Lehman brothers not collapsing. As long as this didn't happen these banks made 20 million dollars a month each as long as Lehman brothers didn't collapse. But they didn't have the money to pay off such a bet. So when Lehman brothers or anything else they bet on collapsed they were screwed and so were we. So, like most poker players they could get embarrassed or walk away or get shot by those demanding to collect their winnings(hedge insurance money). But there never were enough winnings and everyone on earth got screwed. Now when the federal governments try to loosen up credit, they can't for the same reason the government couldn't fix the stock market crash in 1929. Only this time it isn't leveraged investors it is leveraged banks who bet too high and bought the farm for all of us. 1929 and 2008. Two collapses. One caused by individual investors and one caused by unpaid credit default swaps.
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