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To: willcousa who wrote (103410)	5/15/2000 10:59:00 AM
From: Tom Chwojko-Frank	Read Replies (2) \| Respond to of 186894

I didn't mean to imply that we shouldn't touch the system. I just want to know what the risk vs. reward is before doing it. I know I am being extreme here but you are almost saying that we should not have cars if someone is going to get hurt. No I am not. I am saying we need to be aware that people can and will get hurt, and we need to be ready to deal with that. Does that mean we shouldn't do it at all? Of course not. It means that there might be some infrastructure (police, emergency equipment, roads) that we need to add to deal with the car wrecks, irresponsible drivers, congestion, etc. For example: The at-risk portion of a portfolio can be hedged with the more conservative portion (by buying options for instance) in exchange for lower returns on the conservative part in such a way that there is near zero-risk. The upside is the at-risk portion may do great. The downside is that it generates lower returns than if it didn't need to hedge anything. But it's still better than T-Bills. If there isn't any inherent risk amelioration (not risk elimination!) in the plan, then I'd be worried that it wasn't well thought through enough. What about the long and short term effects on the market on adding such a large amount of liquidity? Is there a way to ease into it? Would the fed be almost forced into sharply raising rates for a while to compensate? Again, these are not arguments against doing it. They are arguments for thinking about it. I hope to see these things come out when Bush presents this plan for real. Tom