PAY ATTENTION NOW, WE ARE VERY CLOSE TO DOOM: A Shortage of Bonds to Back Derivatives Bets

[link to www.businessweek.com]


Bernakes QE3 IS BUYING MORTGAGE BACKED SECURITIES AND THEN IS GOING TO PROP UP THE DERIVITIVES MARKETS BY BUYING TRESURY BONDS TO THE TUNE OF 40 BILLION DOLLARS A MONTH AND WHEN THE DERIVITIVES MARKET COLLAPSES AND THEY ARE GOING TO MAKE US TAX PAYERS PAY FOR IT ........OVER 600 TRILLION

Starting next year, new rules will force banks, hedge funds, and other traders to back up more of their bets in the $648 trillion derivatives market by posting collateral. While the rules are designed to prevent another financial meltdown, a shortage of Treasury bonds and other top-rated debt to use as collateral may undermine the effort to make the system safer.

Derivatives allow buyers to bet on the direction of currencies, interest rates, and markets, insure against defaults on bonds, or lock in a price on commodities. The new rules are rooted in the 2010 Dodd-Frank Act, passed in reaction to the near-collapse of the financial system in 2008, which was caused in part because derivatives contracts weren’t backed by enough collateral. American International Group (AIG) needed a $182.3 billion bailout from the U.S. government after it failed to make good on derivatives trades with some of the world’s largest banks. In response, Congress required that most privately negotiated derivatives transactions, known a

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