All this talk about Banks , Derivatives and the leak about the stress teston banks this is too much leverage on panic and on the markets it looks like one more bullet has been introduced in a russian roulette game between treasury , the public and the financial banking institutions ...

It's all very gloomy even worse then what i feel about what's coming , and i'm not realy optimistic, yet i can hardly forsee a total financial meltdown as seem to be expected from such numbers . If most major banks in the US are getting in worse position then was the case some months ago , how could they sustain the rest of the year ?

I read the last two post on the $700 billion Derivatives wich now appears to be over a Quadrillion box and i've been party to that from the questions i asked but that all seem a bit inflated , i'm usualy seen as ... " underscoring the negatives a little too much " but this time i feel like i'm on the rosy picture side of things .

I read the stress test leak post first thinking it came right after my post not realising it answered the previous one , and i must admit if the numbers are right and 16 out of 19 major banks are flunking that test ,with derivative exposure being multiple of 100's of percent their liquidities then i can't see the american government bailing them out to the point of making them solvent , considering what it cost them ( about $180 billion ) for AIG . Yet looking back at what happened with Leahman there's no question what would happen if half those banks were to fail ...

I remember writing a post here a month ago or two saying nobody in treasury or at the FED knew what to do about toxic assets 'cause they probably could'nt figure the extent of the problem it caused the banks , yet i never imagine it could match the numbers from the stress test leak , that goes beyond even my imagination.

If those numbers are right " depression, collapse of the economy, and hyperinflation " would be the " ordre du jour " for quite a while to come would'nt it ?

Treasury bonds would be worthless considering the staggering amount of money needed into " TARP 2 " , forcing them to print money to buy their own bonds .

The dollar in turn would down spiral as in warped black hole , and gold would hit the roof while the stock markets would totaly melt like snow in the sun .

All that doe'nt make sense at least not in the short term this could happen gradualy over the next two or three years , but for some reasons i expect the banks to come out in a better shape then what's in the leak, though i'd be hard press to explain why , but i just don' see " the end soon , it's just to " cataclysmic for me , maybe i'm a bit optimistic or it's just wishfull thinking on my part . I sure hope those numbers are wrong 'cause the alternative seems to lead to a depression worst then the one in the 30's and to social unrest for a long long time !

Now i thought my crystall ball needed a polish but now i think there might just be too much light reflecting on it , what do you think it is ?