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To: Alan Whirlwind who wrote (35205)	6/11/1999 8:39:00 PM
From: John Hunt	Respond to of 116753

OT - But heck it's the weekend re Clinton/Gore Hi Alan, I watched Gore giving one of his into the camera talks a couple of days ago ... Unbelievable how much he looked and talked to the American public like Mr. Rogers used to do on PBS with the kids ... All he needs is the sweater ... Also got a kick out of his wife talking about her treatment for depression ... Not trying to trivialize mental illness, but I think if I had to listen to Al Gore every morning and night, I would be depressed too. Interesting to see CNN break the story, being the 'Clinton News Network' and all. :-)) John

To: Alan Whirlwind who wrote (35205)	6/12/1999
From: Alex	Read Replies (1) \| Respond to of 116753

On September 23, 1998, Alan Greenspan testified that: "This heightened sensitivity of exchange rates of emerging economies under stress would be of less concern if banks and other financial institutions in those economies were strong and well capitalized. Developed countries' banks are highly leveraged, but subject to sufficiently effective supervision so that, in most countries, banking problems do not escalate into international financial crises. Most banks in emerging nations are also highly leveraged, but their supervision often has not proved adequate to forestall failures and a general financial crisis. The failure of some banks is highly contagious to other banks and businesses that deal with them." Shortly afterwards, with crushing irony, the US Fed had to organise an emergency bank bail-out of $90B US hedge fund Long-Term Capital Management. "Many of the bankers discussed whether the collapse of Long-Term Capital would put the nation's entire financial system at risk, the Wall Street Journal reported" The collapse of the LTCM fund could have caused a cascade of demands for money. One bank alone had an $880m exposure... this could have caused a contraction in the whole financial system [BBC] "This could start to have a domino effect on U.S. institutions and abroad. There is a real, systemic risk. The Federal Reserve is clearly worried, that is why they got involved" Tanya Azarchs, a director at Standard & Poor's Ratings Group, said. "Long-Term Capital creates "derivatives"... financial instruments whose value is tied to an underlying market index, currency, stock, bond or commodity... But Long-Term Capital used them to place bets that went bad when global markets started to lurch in directions, and magnitudes, that defied the fund's statistical models" [Wash. Post] "They listened to the politicians of Europe and assumed that on January 1st, 1999 an Italian bond will be worth the same amount as a German bond. Italian bonds were at a 10% discount and they decided to trade the convergence. LTCM bought every bond in the euro and sold them against the Deutsche mark. Initially they made a lot of money. During the crash we saw the DAX fall and suddenly the S&P began to rise. Why? They were short the US market and long Germany. Every trade they had was bullish on Europe. They did one other side trade and that was the yen. They looked at JGB's versus interest rates and concluded that interest rates in Japan couldn't possibly go lower. The Japanese rate cut was the final straw that broke the back of LTCM. Japanese rates falling from 50 basis points to 25 basis points wouldn't destroy anyone in this room or anyone else conducting normal business. However, when you are a convergence and/or arbitrage trader, 50 basis points to 25 basis points, highly leveraged, is a 50% move overnight. At that point, the lights at Long Term Capital were turned off." [Martin A. Armstrong] users.dircon.co.uk