[P.O.E.]

The Fed has already bailed out some hedge fund

With what, I always wonder. Printing press running giga-overtime?

[cgbg]

The Fed just removes the losing trade from the balance sheet of the hedge fund and puts it on their own balance sheet—then they pay the other side of the trade when necessary.

Once the other side of the trade knows the Fed has it, then they know they don’t _need_ to cash in their chips—they can borrow against the now secure collateral.

Think of it as spinning lots of plates in the air...