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

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To: maceng2 who wrote (110446)6/27/2001 6:52:25 PM
From: pater tenebrarum  Read Replies (1) of 436258
 
the agreements in question are tied to lease rate/LIBOR differentials. however, there a different types of hedges. some are structured so as to fix a dollar-based forward price. in any event, i just wanted to point out the major flaw in the hedgers' thinking. they assume that the recent past is the perfect template for the future, that the stability of our monetary system is somehow guaranteed. they trust in other words in the greatest con game in history to continue functioning without hicc-up.
i have never heard of hedges containing inflation-indexing clauses.
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