Options Jerry, I agree. Have to be careful here. Why all of a sudden did Alan G. cut rates? All of a sudden he gets 15 guys into the Waldorf Astoria 3 weeks ago with Long Term Capital costs on an " emergency bail out plan? ". There is something fishy here that Alan G knows ( after having spoken to all the banks CEOs.
Here IMHO is what Bank CEOs told Alan G:
" Alan buddy, we are in deep doodoo here. You know that for years now we've made money by loaning to folks. All the way to Mexico and Malaysia as well as in the US. Well OK so we were reckless and folks defaulted as often these uncaring loaners are won't to do.
But Alan, somehow we always sneaked out of the pile of sh''t courtesy of Uncle Sam. You bailed us out in the S&L; Out of Mexico. Out of Chile. To some degree out of S.Korea. All the good folks from the IMF fund, Rubin, the Demo & Republ parties ( different dress, same cloth ) etc.
But Alan now things are looking bad. We now HAVE a G I A N T amount of money loaned out there because Alan unfortunately we used Nobel buddy Shoal's Nobel winning rocket fuel formula: you got $2 and borrow $100; yes Alan it's like a homeowner putting down 2000 and getting a 100000 mortgagee know it sounds funny but the formula made it look so real.
And Alan we at Long Term capital were pros at it. Imagine what other copy cats did, like in the go mutual funds. There are >15000 funds Alan.
So now Newt is being nasty as usual and says he will not cover our horse race bets by funding IMF. Also he won't raise Joe Blow's taxes
like Ted-Chappaquiddick-Kennedy and Co did in the past.We've been calling slick Billy for the last 12 months but the conversation was interrupted by a sucking action in the background. Also lately when we call he says he's out of the office for business and to leave a recorded message.
We also know that Joe Blow has 20 credit cards and he is maxed out
with borrowing.
So Alan, please, you MUST lower interest rates so the Joe Blow perhaps can borrow a little more, as well as Thailand, Yeltsin, you name it.PLEEEASE."
I think that's what happened Jerry. Of course the question now is, will Joe bite the bullett and borrow more to help his neighborhood bank out?
I don't know. We can look at Joe Blow Choon Soo Kim in Japan though: interest rate there are now down to 0.25% !!!! and he is not budging!! No borrowing. Take his meager paycheck home ( what's left that is after taxes, and stashes it under the mattress. He says he doesn't trust the politicians any more ( and I can't blame him ).
So there it is Jerry. here are today's headlines on the matter:
BLOOMBERG:
European Stocks Pare Gains After Rate Cut; Bank Advance Stalls
London, Oct. 16 (Bloomberg) -- European stocks pared gains
on concern a U.S. interest rate cut won't avert a slowdown in
global growth. A rally by HSBC Holdings Plc, UBS AG and other
banks stalled on speculation U.S. bank stocks will slide later.
''There could be second thoughts this afternoon that there
might be bad news for the banking system,'' said John Hatherly,
who helps manages about 19 billion pounds ($31.9 billion) at M&G
Investment Management Ltd., and isn't buying bank stocks. The
U.S. Federal Reserve might know of ''some potential problem that
could hurt U.S. banks.''
.......................
The banks ''will run, so try to buy those you feel more
comfortable with,'' said Greg Eckersley, the chief investment
officer of Alliance-Odyssey Capital Management in South Africa,
which oversees about 900 million rand ($160.86 million). Still,
''We still have a few negative surprises to come out of the bank
sector and would remain cautious.'' The surprise cut showed
''extremely able and cautious central bankers buying a little
insurance,'' he said. ''Unfortunately, the world needs more.''
Top News
Fri, 16 Oct 1998, 10:03am EDT
U.S. Interest Rate Cut Boosts Pressure for Cuts in German, U.K., Europe
European Economies: Germany Holds Rates as U.S. Cuts (Update2)
(Updates mark-dollar exchange rate, 18th paragraph.)
Frankfurt, Oct. 16 (Bloomberg) -- Germany and most other
continental European central banks aren't likely to follow the
U.S. Federal Reserve's lead and cut interest rates this year,
analysts said. To do so would jeopardize the process of merging
11 European interest rates into one rate on Jan. 1.
Although yesterday's U.S. rate cut, the second since Sept.
29, threatens to erode European growth by raising the cost of
European exports in dollar terms, analysts said the Bundesbank
won't cut rates and jeopardize the process of merging 11 domestic
interest rates into a single euro interest rate by Jan. 1.
''Will Europe follow suit? Not imminently, not while the
convergence process is still in motion,'' said Alison Cottrell,
an economist for PaineWebber International in London.
The U.S. cut, which makes dollar-denominated investments
less attractive, caused the U.S. currency to fall 1 percent
against the mark today. Growth in Germany, the world's biggest
exporter, and other European countries could slow as the cost of
its exports rise overseas because of the dollar's decline.
Should the Bundesbank, continental Europe's de facto rate-
setting body, hold fast to its pledge not to cut rates this year,
that could accelerate the drag on European growth stemming from
recessions in Asia and Russia, where demand for European exports
has plunged and currency devaluations have made Asian exports
cheaper and more competitive in Europe.
All is not good in the praire Jerry. I sold everything. Back to 100% cash now,
TA
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