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To: re3 who wrote (79843)	12/16/1999 8:40:00 AM
From: flatsville	Read Replies (1) \| Respond to of 86076

yeah...let's not scare anybody, eh? (note to heinz--This article contains a mention of derivative funds, but no mention of "troubled funds.") Fair Use/etc... Global Financial System at Risk Dec 6, 1999-- The global financial system will face its largest challenge to date from Y2K. The last real threat to global markets was the Russian debt crisis in the fall of 1998. In 1998, Russia only represented roughly 1.5% of Gross World Product (GWP) and yet the U.S. stock market declined over 20%. Y2K risks in emerging markets significantly dwarf the Russian threat. International Monitoring believes that most institutional large value exchanges and clearing systems are now Y2K compliant. Unfortunately these efforts alone will most likely not be enough. International Monitoring has published a technical white paper highlighting the risks to the global financial system which has been submitted to the U.S. senate sub-committee on Y2K and is available free online at www.intl-monitoring.com/banking.htm The Y2K financial threat comes in the form of market liquidity disappearing with extreme volatility filling the void. A recent article published by Reuters on Dec. 2nd indicates that many sophisticated derivatives funds similar to LTCM (Long Term Capital Management) have, or are currently liquidating their positions. The article went on to state that these funds are anticipating volatility, which falls outside of their historical models. Highly leveraged derivatives are highly sensitive to extremes in volatility. This volatility could easily be transmitted to traditional bond and stock markets. The U.S. Fed has done an excellent job of planning a Y2K strategy for the U.S. economy, between the extremes of excess liquidity leading to inflation and limited liquidity leading to institutional runs and flights to quality. Unfortunately the U.S. Fed isn't big enough to be a lender or liquidity provider of last resort to the world. Liquidity and Y2K counter measures have been created by the fed and many central banks. The creation of a US$426 billion market in repo options by the fed is one of the more creative ways of offering liquidity on tap over the Y2K period. The fed and other G-8 central banks have expanded their definitions of acceptable collateral in an effort to bolster banks positions and available liquidity. These are significant defences. Whether they will hold up in the face of volatility extremes in the multi-trillion dollar derivatives market is another issue. Many central banks in important markets are not as sophisticated or as well prepared as the Fed to respond to this crisis. The Asian and Latin American economies, which have just posted improving GDP figures in the last quarter, are at risk. Lesser economies are at severe risk as they will be some of the first to lose liquidity in flight to quality or liquidation situations. Individuals in these economies are at risk of events far worse than the Asian crisis of 1997. The de-monetisation of economies or extreme currency swings are possible for many economies globally. One investor option is holding what may be more stable currencies or gold as a store of value. The debate of putting gold forth as a store of value would seem laughable given its performance over the last 18 years. That being said, yesterday's dog may well be tomorrow's dynamo, as gold's traditional role as a store of value is upheld. Prices have tested new lows around $250/oz. in the fall and shown extreme sensitivity to upside interest as seen in the recent price pop to over $330/oz. a few weeks ago after a positive IMF announcement. Recent prices of $270 could be seen as reasonable in the face of the risks ahead. We recommend fund managers consult the central banks in the countries in which they do business to ascertain their Y2K countermeasures and response plans. -------------------------------------------------------------------------------- International Monitoring is a specialist consultancy based in London. They assess countries technology infrastructure, efficiency of Y2K fixes, and estimates of the lateness of certain fixes. These analyses are used to calculate economic damages and probable Y2K scenarios. The results are used by global 1000 firms conducting business internationally. For more information visit International Monitoring's web site at www.intl-monitoring.com and download a product brochure

To: re3 who wrote (79843)	12/16/1999 1:45:00 PM
From: flatsville	Respond to of 86076

Nations and Their Readiness for Y2K Fair Use/etc... >>>In its final report this week, the World Bank-funded International Y2K Cooperation Center said the millennium bug poses the greatest risk in developing countries, where it anticipates the most serious failures in health, hospitals and government services. The center said large-scale humanitarian relief efforts may be necessary: "In addition to creating technical problems, Y2K could lead to humanitarian emergencies.">>> <SNIP> >>>The most serious economic damage is expected in countries -- generally in Asia and Latin America -- with highly developed information infrastructures and a relatively high incidence of pirated software. Some of those countries were hit in 1998 by financial crises from which they have yet to recover. "Y2K is a unique event in human history," the cooperation center said. "While many of those who are working on the problem on a daily basis believe Y2K's adverse effects will be moderate, the world has never experienced an event so ubiquitous and simultaneous."<<< cnniw.newsreal.com@2@22@3@690