People from the ME have told me the whole place is a zoo and it's all about pride, nothing is rational........
nahh carry-trade is way off it's lows. It's currently uhh... 1 pip.. higher from the low of the day (105.61 vs. 105.60) No crash tomorrow. No steady decline to 10,000. Go back to sleep. The carry trade would have to go much lower than 105.6 and that simply has not happened.
Hundreds of regional banks and thrifts went under in 1991/92/93 and the market didn't crash (although it went into a bear market when using the Value Line Arithmetic Index which represents the average stock). The difference is much of the pain was concentrated on smaller banks back then, today big banks and even brokerage companies hold billions in toxic debt and fantasy assets. I would expect very little market impact from a couple dozen of public smaller banks going under during the summer. However, a number of collapses of big banks (C, BAC, DB, WB, UBS etc.) and institutions - worldwide - can always start off a chain reaction. At this point, we still have no idea how bad systemic counter party risk could turn out to be. Could be a hurricane or a storm in the water glass.