Thanks Deflationist-

I think the next wave of deleveraging which is starting to take hold and increased assertiveness by the Chinese and other bondholders is likely to assist in this process.

You mentioned courage in your statement about the Koreans. I think at the end of the day this is really what we hang our hats on as to how devastating this deleveraging process will be. Politicians both here and abroad have been beholden to monied interests and the parlor games they have created that create no added value to society (especially derivatives) for far too long. It is going to take alot of courage for our politicians to come together and do the right thing for once and put an end to this. I am anxiously awaiting hearing the whaling and gnashing of teeth when Volker lays the smack-down on our financial system so fiscal sanity can return.

"In Death Do We Part" in today's FT it provides a comprehensive analysis of how global authorities plan to institute regimes where formerly "too big to fail" entities can be dismantled in a weekend. Drawing heavily on the experience of the dismantling of Lehman, regulators, including the FSF, are collaborating to change "too big to fail" into "too big to exist", as per Volcker's recommendation. Topics being discussed include a "last will and testament" for banks, providing instructions for rapid dissolution in the event of sudden death. Good stuff.

I've mentioned before how using different historical vs. implied volatility assumptions can lead to wildly different theoretical "valuations" of various derivatives. This is succinctly explained today in Aline van Duyn's FT article "Leaving the TARP Could be More Difficult than Planned", which also details how the valuation of the warrants the government received will determine whether taxpayers won or lost in this deal.

Also, a very encouraging article in the FT entitled "South Korea to limit Currency Margin Trading" describing how that nation is deciding to address the 100 to 1 HYYPERleverage in this market head on. Let's hope other nations show their courage. Our futures are substantially based on our currencies and needless volatility in the foundations of our society should be criminalized.

Nope.

I remember that you did a djia forecast , but I can't recall if you had one for the S&P 500

Nope, everything is working out exceptionally well in terms of my original forecasts for July 2010.

Mr. Fed, what are your intermediate term predictions for interest rates? Has it changed at all recently?

Mr.Fed, I did learn, that was worth reading! Tks.

There's an extremely important and very well written article in today's FT entitled "How to Design Derivatives that Dazzle and Obfuscate". In this piece, Satyajit Das makes a persuasive and compelling argument that the proposed clearinghouse for OTC derivatives faces some real challenges.

It's an outstanding article on derivatives generally and adheres to the George Soros position that certain derivatives (such as credit default swaps) should be completely outlawed.

He makes a compelling case that rather than distributing risk to parties able to bear it, certain types of derivatives actually CONCEAL BOTH risk and leverage AND use (rather than provide) liquidity.

An outstanding rebuttal to the whole Greenspan/Summers/Gillian Tett perspective on derivatives that was so fashionable a while back.

It's easy to understand, written in plain language. I can't recommend anything more highly to anyone trying to get a grip on the downside to jihadi carte blanche worship of derivatives.