BK GUY

Five Reasons the Market Could Crash This Fall

Say you buy home insurance from Insuracorp; your house burns down; you go to collect on your policy only to find Insuracorp is broke. Does your claim against the insolvent insurer make you whole? Obviously not.


On Aug 04 12:10 PM contracontrarian wrote:

> "If Wall Street did put $50 trillion at risk… and 10% of that money
> goes bad (quite a low estimate given defaults on regulated securities)
> that means $5 trillion in losses: an amount equal to HALF of the
> total US stock market."
>
> Any one particular Wall Street firm can lose everything they have
> or even more,but other Wall Street firms would earn the same amount
> at the same time,as they are on both sides of those derivative positions.
> Alltogether "Wall Street" can not lose money on their derivatives...

Whatever Happened to Bankruptcy?

This bailout is nothing like Bankruptcy. In Bankruptcy, all of the company's contracts (executory) can be accepted or rejected. In Bankruptcy, all payments to insiders (management) within the last year can be recovered. In Bankruptcy, the company is protected by an automatic stay. In Bankruptcy, a trustee can be appointed to investigate corruption and graft. Virtually none of these things will occur outside bankruptcy -- which is why this bailout is doomed to failure -- just like the others. This is a bailout for the UAW. Let's not kid ourselves.