Clown-Free Zone... sorry, no clowns allowed Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: pater tenebrarum who wrote (14904)	8/30/2000 2:32:03 PM
From: LLCF	Read Replies (1) of 436258

<the sheer size of the notional values compared to the equity of the owners of these contracts is mind-boggling. it also shows that the financial economy has only a token relationship with the real economy...> The notional value of a contract to deliver a trillion t-bills in one month is a trillion. But the risk is only the NET counter party risk with is monitored like any other loan. So if they have an offsetting loan with that same institution for 3/4 Trillion, the trillion can never be wiped off the balance sheet by a default, only the 1/4 trillion NET. I don't disagree with your bottom line at all, just want people to see that the TOTAL numbers given in these reports don't take into account netting agreements. Why is it important?? Because if Deutche Bank is long a trillion bills in the December month and short them next march with the same bank, their credit risk at this time if something goes terribly wrong with the counterparty is zero. They would just hold back any payment to anyone in the case of defaults by that bank... however the TOTAL derivitives outstanding makes it look like there is 2 trillion in risk! DAK

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next