Here is what I think is going on. Not long ago Alan Greenspan instituted derivatives to stabilize global markets. Because of commodities and futures markets, a drought in Australia or frost in America can affect the cost of raw materials all over the world. Greenspan claimed that using derivatives and allowing people to bet on sub-sectors of the market can help stabilize these markets. New markets could be created and derivatives could be created to allow investors to bet for or against just a part of the total market. This is just adding worse to bad. We should never have futures and commodities markets. Derivatives just allows for more manipulation and takes power away from the producer and the consumer to freely negotiate a fair price.
Derivatives allows the world banks and the economic elite to manipulate our markets. Free Trade has just come to mean a system in which prices and profits are determined by an economic and corporate aristocracy and not the producer. The elites set up new markets just to knock them down, while hedge fund managers make billions shorting or betting against these markets.
As part of this, new derivative markets were created only to be later purposefully destroyed. ENRON created derivatives market based on power in California. The banking crisis was based on a created derivatives market based on sub-prime mortgages. The new market to fail are these debt/equity swaps which allowed countries, cities, and states to trade debt for derivatives. Countries like Greece and Iceland were told they could get out of debt if they traded their debt for derivatives which were AAA and supposedly insured.
The promise was that doing the debt swap would get them out of debt faster. What most were not told was that if the markets failed, then the country would owe even more than before. Now that Greece and other countries are failing, the IMF is coming to the rescue and the Euro is in trouble. To assist, the IMF is coming to America asking for trillions of dollars. This bailout of the Euro will devalue the dollar. A devaluation of the dollar will bankrupt the Middle East because they can only trade oil in dollars and depend on oil being at least 50$/barrel or more to pay their debts assuming a stronger 2006 dollar. If the dollar is devalued, then the Middle East cannot pay their debts and they go bankrupt like Dubai.
This devaluation of the dollar will force Iran to seek to trade oil in Euros. This policy would bankrupt the dollar because the only reason the dollar is holding any value is because other countries must hold dollars to buy oil. If Iran begins selling oil in Euros, then it will bankrupt America. I am concerned that the US will be drawn into a war with Iran over this and the nuclear issue especially if a nuclear device or EMP is detonated on or over American soil.
Barack Obama's popularity numbers are way down. He has flip-flopped on almost every single campaign promise he made. There is a lot of buyers remorse out there. However, I predict that he will win a second term. What will happen before 2012, is that the US will go to war with Iran, the middle East will be on the verge of bankrupcy with no IMF available to bail them out. In exchange for a bailout, there will be an Israeli-Palestinian peace treaty which will allow the Jews to rebuild the Jewish Temple.