Re: Greenspan' and Derivatives

["Gary Santos" <evs@xxxxxxxxxxxx>]

Counterparty risk goes beyond collateralization. Even if the derivatives are
collateralized, the question of liquidity still has to be addressed, i.e.
the collateral may not be able to answer for cash demands especially under a
liquidation scenario. What valuation on collateral was used?
Collateralization only addresses static balance sheet solvency issues via
"dacion en pago" or the surrender of collateral as payment. And, may I add
that the only real solution to a counterparty failure and a demand for cash
payment is for the Bernanke to step in with cold fiat credit via some credit
window at the Fed.