Systemic Risk

What I've been outlining for quite some time as is related to GBN.V stock, is that leveraged sell-side brokers will have built up a very large position dependant on the decline of the stock price. Much like the rest of the market melt-up, which nobody really expected, GBN.V stock has risen on the decline of the $IRX.

Leveraged equity swaps through the use of derivatives are in use in every aspect of equities, interest rates swaps are in every aspect of sovereign and corporate debt, and in the commodities, you have the futures markets with their own form of derivatives.

Some of these financial instruments are good, especially those with some of the underlying fundamental in escrow. However, many are over-leveraged without anything to back them up but a bet on the rise in interest rates.

The following is a continuation of the series of deep capture.com, you can see how its possible to have the market we have today, even though the seriousness of the financial crisis has begun to hit home.

You can see the amount of money in the short term high frequency trading markets sloshing around as a result of central banks around the world propping up systemic risk, not realizing that the more money they throw at the problem the greater and more difficult the problem is to solve:

http://www.youtube.com/watch?v=hH5cMQLJRUo

-F6