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Pastimes : Clown-Free Zone... sorry, no clowns allowed

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To: pater tenebrarum who wrote (3036)	7/12/2000 2:40:39 PM
From: LLCF	Read Replies (1) of 436258

< OTC derivative contracts are not liquid - they depend entirely on counterparties making good.> Yes, like I said, counterparty risk. The AAA rating is very important for that reason, Credit Swiss for example keeps CSFP's [Credit Swiss Financial Products] rating AAA to assure they can enter into the largest most lucrative derivative contracts. Swiss Bank is widely thought to have the most sophisticated risk models on the planet. Personally I think there is more risk of their clients blowing up [Gibson, Orange County, etc.] than the banks[then getting sued no doubt]. <the question what happens in an inter-market MCHVE to those positions remains unanswered - we haven't had one yet since everybody has derivatives growing out the wazoo> Yes, I agree.... and any one large investment bank kicking the bucket for any reason would send all derivative houses reeling. My comments above do not take into account all the other banking activities that have probably become much more risky as the bubble expands... you have to keep those large bonuses comming in you know... it's a given now. DAK

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