JG, thanks for the compliment. I came up in a British owned insurance brokerage (Willis Group PLC) and they seemed to prefer low-key and even keeled to brash zealotry. We used to have an expression in insurance, “passing a burning match”, which referred to passing liability down the food chain. I think what is happening here in the derivatives market is exactly that, compounded by Stan’s observation that no one involved really has a complete picture of what is going on.
There is almost a willful ignorance on the part of analysts, commenters and observers as regards the true picture of how risky these instruments are and how much overall danger they pose.
I would think the gravest concern would be risk aversion overcoming greed (yes, it is possible when losses run high enough), combined with a credit crunch. The liquidity we are awash in can and probably will go away. If this contraction occurs, the severity of the downturn will be greatly amplified and the reverberations will be felt much more strongly and throughout the world.
Granted, this is somewhat Chicken Little, but not outside the realm of possibility. The more I watch the gyrations of Bear Stearns, and how quickly Merrill Lynch liquidated their sub-prime MBS position, the more I think Denmark is a lot rottener (sp?) than any of us realize.
JG: Are those your initials or do they correspond to a Navy rank? Please tell me the former, rather than the latter. The only thing worse than being upbraided by a Navy officer is being upbraided by a Marine officer.
