To: fut_trade who wrote (81318 ) 12/28/1999 11:50:00 AM From: pater tenebrarum Respond to
it goes into stocks. they won't dare mop up the liquidity unless forced to do so by a dollar and/or bond market crisis. today altogether 15 billion dollars in temporary reserves were added. take the 'temporary' with a grain of salt. the merry pranksters know that withdrawing the liquidity would lead to WS catching a cold...and bear markets, even corrections, seem to have been outlawed. i don't buy the y2k guise anymore as a reason for the massive liquidity injections. something else is going on, but i sure have no idea what. i have repeatedly made guesses here, one of the more interesting of which is probably the one concerning interest rate derivatives. the banks have trillions of dollars in off-balance sheet derivative contracts hedging other players' interest rate risk. these derivatives do not need to be marked to market, and yet it is clear that someone has to be sitting on huge, and i mean HUGE, losses. as mentioned before, the hedges of Fannie and Freddie alone mean that the people on the other side of those trades are in the red to the tune of 30 billion dollars. there are also rumors going around that several prominent hedge fund managers were leaned upon to withdraw from the gold market when the big short covering spike occurred in September, as it was feared the 'system' (euphemism for fat-cat investment banks) would suffer from sustaining massive losses on the vast short position in the gold market. of course, that information stems from the notoriously conspiracy theory-prone circles watching the gold market for signs of manipulation.
