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To: MythMan who wrote (2961)	7/10/2000 5:04:23 PM
From: pater tenebrarum	Read Replies (1) \| Respond to of 436258

in a systemwide conflagration they would NOT be saved...it won't matter who they are. as to your doubting of the risk involved in outstanding derivatives, i want to remind you that they have to this day not been stress tested. the risks when looking at individual players books seem actually not all that daunting, as often risks are hedged and counter-hedged. but you will remember the trepidation that ensued when a single hedge fund turned insolvent during the Russian crisis - immediately (and correctly) systemic risk entered the equation. it is the failure of counterparties to the various contracts that are supposed to be offsetting risk that is of relevance. imo, the real test still lies ahead - a several sigma event, encompassing several inter-related markets will show us what the risk really is. derivatives are not like fire insurance...there's a material difference. with fire insurance, if 10,000 houses are insured, and 100 burn down, the insurer will survive. if 100 counterparties are unable to fulfill derivative margin calls in an MCHVE, the whole shebang comes crashing down, and only those with massive reserves will survive.