Options Wonderland

[~6979~]

"...Reminiscences of a Stock Operator 2008...IMO...

1) Thousands of bad morgage loans were distributed throughout the US...for many many years(hence the real estate boom of the 90's)...(some of these absolutely ridiculous loans where given to people that would never have considered the obligations/ payments if they wouldve known how bad the economic conditions could possibly get in the coming years thereafter...) Most of these arrangements were orchestrated by the ever so increasingly swift industry of real estate brokers...Real estate brokers get paid mostly by performance...the more loans they dish out...the more income they bring in...regardless of whether or not the borrower can ever pay the loan back...real estate brokers get paid right then on the spot...their financial responsibility ends there after closing...

2)Real estate companies (which often are financed by banks...) then proceed to package these morgage loans...in to thousands of debt morgages bundled up in to one package...These debt packages are then given a name...names like 'High Enhanced Real Estate investment packages/Funds'...instead of a more proper/ name, like, morgage loans that were orchestrated by American Real Estate professionals that really dont care about the outcome of the future of the loaned capital or the true reliability of the borrower (as long as they get their fee)...

3)These highly sophisticated packages are then sold globally for hundreds of millions of dollars to financial institutions...Sometimes they are sold over and over again to different financial institutions of the world...The names of the packages as well as the current selling value of the packages will change and/or fluctuate over it's life...the only thing that doesnt ever change is the Intrinsic Value...(Look up Benjamin Graham to understand Intrinsic Value in greater depth)

4)Years after these highly speculative packages are created,the American real estate market basically crashes; after an amazing, capitalistic, greedy, 10 year rally...this market still has not registered a precise bottom...

5)So not only are some of these Individual American morgage holders still paying the payments of the original 200 - 600 thousand DOLLAR Loans,but the value of their property is down almost and sometimes over 50%... For example, a $300,000 property now sells for $150,000.So if the borrower wanted to exit the financial obligation, they would be forced to swallow a huge loss...a lot of people simply give up and are protected by the bankruptcy laws...the financial institutions that intended to recieve their capital back with interest now take a complete loss on their investments...when this happens in economies of scale, the results are devastating...

6)Unbelievably, a lot of American financial instututions are saddled down with these absurdly risky Real Estate Debt Packages...It was correctly analyzed by many different American financial regulatory bodies that if the government allowed all of these financial institutions fail, it would in effect result in an American Financial Meltdown...

7)Instead of allowing that meltdown to come in to reality, the regulatory bodies have decided to intervene and effectively save the system...(for instance, ~AIG~ is a financial institution that was in dire straights...the FED decided to print 85 billion American dollars to basically save them...) The US government has recently announced that it is intending to secure the debt of a vast diversified list of American Financial Institutions...some may need way more than ~AIG~...

8)Ok, so problem solved right? Wrong...another policy change that is also recently in effect is the banning of short selling within alot of stocks; temporarily focusing on the finance sector. So a lot of other financial institutions that specialize in shorting sectors where due diligence reveals to be a weak and within a vulnerable industry are basically hung out to dry...hedge funds ,ETF's,and astute mutual fund's are some of the people that are directly affected by these new policy changes in a huge way...so the motto is to burn shorty righy now...

9)What if the shorties and all of their global network of financial institutions (trillions of dollars) get together and hold a revolutionary cash revolt??? In other words, the U.S. government has effectively garaunteed the financial backing of the financial industry. This garauntee is directly related to tax payer money...How much money will have to be printed is unclear...Quite frankly, if there is anyone on earth that could project an accurate monetary figure that turned out to be true is not only very intelligent but also may have some sort of psychic powers...If many countries or hedge funds liquidated assets at the same time globally...the market would crash terribly and tax payers would now be forced to pay the price because no longer does the FED just simply create money...they now have the ability to speculate in the global markets...If these powerful financial groups choose to interpret this new policy positioning as a threat, then the market as we know it is definitely in trouble...what would make it even more of a slap in the face is if they switched their liquidated currency from ~USD~ into other currencies such as the Euro or the Franc...a double whammy so to speak...And the whole time that all this potential selling is going on, there is absolutely no bottom that can be realistically identified because of the lack of short positions...

10)One of the biggest and saddest risks with everything that is going on, is that the policy changes that are now in place for the financial industry ( and supposed to be only intended for the financial industry's use) are now being craved by any failing public company in the American market...Many failing companies that have absoluteley nothing to do with the financial industry are trying to get get on the US-Tax-payer-save-us-band-wagon...How far is this shorting policy going to go???If enron was still around with the same issues, would they be considered for a rescue too???

11)october 1929...october 1987...october 2008..."