4/21 1:30

Currently 1.5% short silver.  Will not add until 4/29 or stock market breakdown.
I don't fight I1 so 4/29 remains a target high date.  In order to generate a sell signal the stock market needs to rally further.  Critical support will break on a decline below 10,950.
I am tired of listening to talking heads on the Goldman Sachs issue.  They are missing the larger picture.
The focus on the street has shifted away from Goldman Sachs, as it appears the SEC case is weak. According to the Bank for International Settlements, the total outstanding notional amount is $604 trillion (as of June 2009). The market value is $25 trillion. Of the total notional amount, the vast bulk are interest rate contracts and 36 trillion (6%) are credit default swaps (CDS).    On a market value basis CDS are only $3 trillion out of a total of $25 trillion for all derivatives. It is unknown what proportion of the CDS were for CDOs, and the CDO implosion prompted the swaps to become active. So, less than 6% of the market created world-wide havoc. The amount of CDS fell by 50% during the crisis but has stabilized. Estimated current CDS at 36 trillion notional value.


Because OTC derivatives are not traded on an exchange, there is no central counter-party.  Many OTC derivatives trade through a clearing house, which accepts the default risk.  Most do not trade through clearing house.  This is the realm of investment houses and the investment side of big banks. The larger picture is that the derivatives trade will be regulated and most will be forced into clearing houses by government regulations. This will take away the incentive for investment houses to deal them (make market).  So, sell the investment houses as their proprietary trading will be far less profitable than in the past.
 
Currently Goldman Sachs legally front-runs trades on the NYSE by using purchased data feed to inspect each trade by its computers before it enters the NYSE trading computers.  While this may be legal it is highly unethical for the NYSE to sell and Goldman to use this data. 
The discussions on the financial networks indicate the level to which right and wrong is blurred within the minds of the financial community.  We have had the concept of money twisted for so long that money is whatever we desire it to be.  If you accept the precept that money is whatever we desire it to be then you are infected. 


 



CDS is the market that the government will seek to regulate, but CDS are tailor-made. The blow-ups occurred is the CDO and that is a function of lax credit extension. In other words the entire problem was due to excessive credit extension to unworthy borrowers.