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"NO BID" threat looming. When the computers stop trading...any tradable funds may drop to zero!
Ms Sans Serif
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[quote:Anonymous Coward 27237669:MV8yMDQ4NTczXzM0NDI3NjgwX0VFRUE2MDlD] ..Well having no idea how financial markets actually work, I can see how a uninformed person would reach illogical conclusion based on false premises. I will help you,bonds trade at inflation + 2-3% for people/corp/govt who have excellent payment history..the less your credit history or current financial situation, you pay more than 2-3% above inflation. For example, I just bought a 2010 used car for $11k, I put down $5k and my car loan was 2.9% for 48 months. The car dealer's loan rate was 12%, now that was for the guy with a repo and bad checks and late payments, Greece if you will, BUT somebody was willing to lend him money as long as the reward was high enough. Now the problem is if the borrower can afford the payments at 12%...Greece cannot under it's current conditions...it's failure has already been calculated into all bond purchases. Don't think of a bond as any different than a car loan, mortgage...it's a loan at a interest rate and a schedule of repayment..it may or may not be secured with assets and there are legal claims in court if need be down the line but bonds are loans...no special magic, no secret cabal...you can buy them if you have the funds or join a mutual International Bond Fund...some will hold a very small portion in high interest/high risk bonds because "most" are repaid and the return is excellent..IF you can absorb the loss if they default. No one has a high percentage of their portfolio in these, rather no well run financial institution...thats why Germany/France is lending the money..banks and trading houses won't buy and can't find buyers, the rate of return they demand is higher than Greece can afford...so the Nations are buying loans that normal people want no part of. So if Greece defaults,German and French tax payers are on the losing end. A few banks will also take a hit but they have already sold off or written off Greece as a loss anyway. [/quote]
The Greece emergency domino effect could be just around the corner...
According to rumors from the "pit", computer analogs are now trading the vast majority of the action we see. In the event of a "meltdown", the computer action would get shut off and you may very well have a case of "no bid" on any tradeable entity including most "funds" of folks savings entities.
What this means is that since banks are SO LEVERAGED RIGHT NOW (they are way past bankrupt), the value you see on your account is actually FICTITIOUS and could be wiped to "0" in an instant. This can happen when there is "no live body" in the trading pit to give a bid to buy your funds and this means "no bid" which drops that stock to "0" value, which is much closer to the true value anyway.
This kind of thing happending en masse is a very real possibility and would give financial institutions a "way out" of and "unsecured" funds, in other words they would love to NOT HAVE TO PAY on these funds and do it legally. This is how you can be legally dropped to zero overnight.
You thought getting whacked HALF in 2008/2009 was bad?... The only modest protection you have is "cash in hand" and anything you could guarantee as a "secure entity" (not many of these exist now). The buying power of cash would also be greatly diminished in such an emergency, but something is better than nothing.
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