muses of the moment

August 31, 2012

A little humor

Filed under: Credit Derivatives — totallygroovygirlfriday @ 6:09 pm

groovygirl found this 2002 Fed paper humorous. Click here.

It is 52-pages, so if you are in a hurry, read the intro and the conclusion (page 32-33-34). This Fed paper examines if a financial crisis, like the collapse of Russia in 1998, would have a major systemic impact via the interest rate swap market in particular. Guess what the paper concludes?

groovygirl wonders if they did a paper for the collapse of Europe?

Side musing: groovygirl skimmed through the math on this one, it is not her best subject. The take-away: it is the spreads that kill you, not the real interest rates. That is why LIBOR was manipulated (up and down), to keep the spread from causing a default on the swap. (gg suspects that they still manipulate it, they have to, it’s the only option.)

Nothing has changed!!! There are more interest rate swaps now than in 2007-8 (or 1998). It is the largest portion of the global derivatives market. And it is the spread that blows the thing up, not the rate, so the Fed can not control the collapse. Even if they wanted to.

They can only bail out the damage from the aftermath. An interest rate swap is a bet. If you are betting that interest rates will go up in the next five years, who is taking the counter bet? Why would they do that? Those are the questions to ask yourself. Those are the questions government regulators should be asking themselves. Click here.


IMPORTANT: Latest Blog Post from Martin Armstrong dated August 29, 2012

Click here for Martin Armstrong’s latest blog post entitled Will We Collapse By August 2013? dated August 29, 2012.

Very important update from Martin. He is warning that the timing of the economic confidence model signalling a collapse/major crisis may be accelerating. He is also suggesting that a “two-part” crash could occur such as the one in the US in 1987 followed by Japan in 1989.

groovygirl is very concerned with this development. This is the first time that Martin has mentioned the August 2013 turning point as anything but a further progression toward the 2015 collapse.

Remember the Economic Confidence Model is a confidence model, not necessarily a specific market model.

From Martin’s blog post:

Former Clients familiar with the Economic Confidence Model have asked is this a rapidly advancing cycle as was the cast in 1989? The Answer to that question appears to be YES! There, we had the 1987 Crash on the half cycle followed by the collapse of Japan in 1989, and then the rise and fall of South East Asia as the US S&P 5oo bottomed precisely with the low of that wave in 1994. The accuracy was astonishing from the 1987 Crash right to the day, the peak in Japan 1989.95, and then the precise day of the low in 1994. This wave appears to be working in a very similar manner. This means August 7th, 2013 we must be very careful about next year. We will be looking at the global markets at the upcoming conferences(San Diego-Bangkok-Berlin) around the world. So yes! This is a very serious development. We may not last until 2015.75 and that could be the complete economic meltdown.

Martin also released a blog post on ObamaCare. Click here.

PFG drama

Filed under: MF Global bankruptcy, Odds 'n ends — totallygroovygirlfriday @ 11:48 am

Unwinding the big chaos is big business….click here. Apparently, crime pays, even after you get caught.

Time to Talk or Fish?

Filed under: Odds 'n ends — totallygroovygirlfriday @ 1:51 am

This is a long post, but an interesting, thought-provoking post. GG found this from a link through Solari site.

Click here for post Time to Talk or Fish?.

They are having a Transformations Gathering in October. Their suggestions for discussion topics are interesting too. Click here.

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