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I think this is a reasonable fear. I remember reading an article some time ago about LB having their derivative holdings rated AAA. We all know how that went.
That being said, I think there's a better chance that this crisis will deflate, the economy won't crash, we'll see a recession, and the power of Wall Street will shift over the next decade or so to Bejing, Tokyo and Dubai.
For our children to enjoy our quality of life, America will need to lead the World to energy freedom, which we are more than capable of doing.
This isn't just a market correction, it's a way of life correction. We can no longer consume so much more per capita than the rest of the world.
-spence
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