Reply #26: Angels of Deception, Part 2

[54anickel]

http://www.321gold.com/editorials/mackenzie/mackenzie082504.html

Derivatives square up twice a year, March and September. And by my simpleton math, the Gross value of the OTC Derivatives Market has now exceeded one-half a Quadrillion Federal Reserve Notes (FRNs, Dollars don't really exist). Of course we won't know until the Bank of International Settlements accounts for the reckless amount of speculative "Moral Hazard" insurance purchased for 2004.

Can't help but think of those poor Dutch settlers who wandered out into the bays of the West Indies to collect fish in the absence of a tide in their respective harbors, only to be drowned by the ensuing tsunami. Earthquakes were not well understood then and I find very little reason to believe the scope and scale of the existing, UNREGULATED Over the Counter Derivatives Markets are understood all too well today.

The Nobel Laureate who managed to blow up LTCM is still in business today, chilling and grilling with the rest of levered speculators, placing even larger bets on outcomes with absolute clarity. Master Chef's one and all, cooking up a dizzying array of malnourished and empty entrées, Bobby Flay condiment squirt bottles in hand. Those dishes must look appealing, but I suspect, much like the daily cheese platters served up maintain the current levels in the equities markets, too much dairy can be a bad thing.

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Yesterday's scorched earth policies clearly burned a lot of brush surrounding the FED's camp as Mr. Magoo (windsurfism) clouded the sky with smoke once again:

"Greenspan sees rebound in China in second half '04"

"Greenspan says euro zone economy remains 'sluggish' "

"Greenspan says Japan growth may be 'self-sustaining' "

"Greenspan sees chance of hard landing in China"

...followed by more billowing plumes of WMDs

"Greenspan can't say if housing bubble due to poor data"

"Greenspan: More data needed to declare a housing bubble"