Here we go again, Dow plunges

[alephnull]

*Puts on economist hat*

Most people seem to be misinformed about what is going on here. This is to be expected as nobody really knows, but it's pretty obvious (or at least it should be) that the 5% default rate among mortgages in the US is not one of the major problems here.

Pretend for a moment that it was. What does it then say about a global financial system in which a 5% default rate on housing loans can cause complete systematic collapse of the world's major capital markets and their economies?

The fact of the matter is that the Quants have been in an arms race with the rating agencies to obfuscate the true value of the of various forms of derivatives for years. Basically the financial math masters students were defeated by the phds, and now nobody trusts even the AAA tranches in anybodies products.

What this means for the gamming industry is that if this goes far enough noone is safe. Not even microsoft. When people say they are sitting on tons of cash, they don't mean it literally. Gates does not have a huge valt where he swims around in money like duck tales (as far as I know). They have it invested, and probably given their financial savy in something fairly sophisticated which has now become a liability.

Sony is in trouble as they likely rely on access to cheap credit to exist. Nintendo as conservative as they are, are probably in the best situation. However the entire Japanese market is now taking a serious hit with the collapse of the carry-trade.

Nobody is safe, this is why the world's elites are panicking. When was the last time their was 1.5 point, globally coordinated rate cut?

Have a nice day :P