Margin Calls - Share The Pain Message Board

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Strategies & Market Trends : Margin Calls - Share The Pain

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To: TradeOfTheDay who wrote (81)	12/2/2000 1:54:44 PM
From: Shakush	of 158

Very astute observation, TradeOfTheDay. Charles W. Peabody, the author of the more recent article I referenced reports that according to sources on the exchange floors, recently, margin calls have tended to be met with cash and not liquidation of stock. The article provides data supporting his contention that more people have been borrowing against "inflated" equity values in their homes and running up credit card debt. He expects that margin debt levels will soon show substantial declines, and says that margin calls have been going out to the likes of Bernie Ebbers of WorldCom. Further, the idea that margin debt is now in a full-fledged decline is supported by recent bank loan loss figures; i.e., banks are starting to report losses on personal lines of credit to entrepreneurs. The earlier article noted that historically, at least half of the margin debt gets wiped out in a bear market, and said that "if this is the bear market, we have a long way to go".

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