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

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To: pater tenebrarum who wrote (14833)	8/30/2000 1:20:48 PM
From: LLCF	Read Replies (1) of 436258

Heinz, as I've mentioned before: Graph number one is illuminating in showing the rise in notional derivatives. 1990 = $6 trillion 2000 = $37 trillion Notional value WAY over states the risk, if you're long a trillion tbills what's the risk? Counterparty. Note the 'bilateral netting' agreements as well, no messy lawsuits over one contract, total gets netted so banks can more easily estimate each counterparty risk. Still, as you have said.. the system has never been tested. Any 'freeze of assets' by a government [which in a major default where any authority steps in is certainly possible] could cause a chain reaction of derivative contract technical default, and scare the crap out of people. DAK

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