Moon Kil Woong

The Real Cause: Current Account Deficit

Nice to point out fundamental problems. In order to cover up the effects of debt more and more leverage (debt) was allowed to build up. Banks that leveraged themselves 5x started leveraging themselves 20x with the help of brokerages who increased their leverage from 20x to 45x withthe help of insurance like policies with no collateral and no regulation. This allowed the party to go on and on. Now it's time to pay the piper except the ones we have to pay is China, Taiwan, Japan, Korea, etc. who aren't feeling too swell about demand dropping off a cliff now that America is broke.

Currently CDS contracts total 55 trillion. That's why no one will loan to anyone until this gets sorted. The SEC allowed everyone to suspend market to market allowing everyone to hide the liability. If the current account deficit is consumers debt driven binge than CDS and CDOs are the bank and brokerages version of it. The problem is, with the US net assets at $72 trillion dollars before September (about $8 trillion less now) who can afford to cover their exorbinances. No one. BTW gov+consumer+corporate US debt = a whopping total of $61 trillion.

Now we see the light or darnkness depending on how we look at it.