Refco and Financial Derivatives Market Meltdown.

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October 6, 2008

SouthAmerica: No wonder the entire global financial system is scared to death right now.

The Financial markets has the right to be in complete PANIC right now, because they have a very frightening event that is underway the nuclear explosion inside the global derivatives market has frozen the entire system. At this point nobody trusts anyone for a simple reason the derivatives are all over the place and they are out of sight since the banks and corporations don’t need to record the financial impact of these instruments on their books until the chain reaction of massive losses are spinning completely out of control as it is the case right now.

At this point the market does not even know what are the derivatives instruments damages and losses that have been materialized in relation to the nationalization of Fannie and Freddie, the Lehman Brothers collapse, the AIG collapse, the WaMu collapse, and other financial institutions from around the world.

We are going to have a Tsunami of financial institutions getting insolvent and this financial Ebola virus is going to spread very quickly affecting banks, corporations, hedge funds, and so on….

The result will be PANIC and a humongous global financial meltdown.

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October 11, 2008

SouthAmerica: I wonder why Mitsubishi UFJ Financial Group Inc (MUFG) would invest $9 billion dollars in cash into investment bank Morgan Stanley?

Morgan Stanley's entire market value now stands at $10 billion dollars, and that is only $1 billion dollars more than what MUFG market cap is; Japan's largest bank. The question is why MUFG insists in buying 21 percent of Morgan Stanley – a very sick puppy - Morgan Stanley may implode by this coming week, because of the imploding derivatives market, and might be forced to go out of business, and in September 2008 Morgan Stanley was loaded with derivatives; they had contracts worth $7.1 trillion

Why anybody other than the people who are brain dead would invest in a company that is ready to collapse under the weight of $ 7.1 trillion dollars worth of derivatives contracts.
Right now Morgan Stanley is the Titanic of the financial world, they already hit the iceberg (the derivatives market meltdown) and this gigantic ship is already sinking, and MUFG is welcome to get aboard and sink together.

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